FCA must stop this deal
NON-STANDARD Finance (NSF) boss John van Kuffeler is one of the City’s cavaliers. He has irrepressible confidence and managed to persuade shareholders Invesco and Woodford that the pursuit of much larger and profitable doorstep lender Provident Financial would be a walk in the park.
A 70-year-old Flemish aristocrat, van Kuffeler is as adventurous in business as he is in his personal life. His confidence extends to dismissing breaches of company law as ‘technical infringements’.
But in a letter to investors, Provident chairman Patrick Snowball says breaches of the Companies Act, including the payment of dividends from reserves, were unlawful, an indictment of the NSF team and down to weak oversight.
Snowball accuses van Kuffeler of orchestrating a ‘coup d’etat’ by a management team with a record of ‘value- destructive acquisitions’. Hostile takeovers are often bitterly contested but the mud-slinging in this deal is at an entirely different level.
The NSF’s £1.3bn offer is opportunism dressed up as benevolence with little regard for the interest of customers. Provident, owner of the valuable Vanquis Bank, has 2.4m clients, many of whom are among the most vulnerable borrowers in Britain. This is a big bite for NSF, with just 180,000 customers and a lack of contemporary experience in managing something so large and complex.
In his letter, Snowball focuses on the lessening of competition and the possibility that the Competition and Markets Authority could take its probe to the next stage. If that happens the so-called ‘irrevocable’ votes from Invesco and Woodford would be unlocked and the deal would come off the rails.
It is fascinating that, having shouted victory from the rooftops ten days ago when NSF passed the 50pc mark for shareholder acceptances, the company has so far failed miserably to mop up the rest of the votes and had to seek an extension from the City referee, The Takeover Panel. The real reasons why this deal should not be done are ones of financial prudence and stability.
The City regulator, the Financial Conduct Authority (FCA), made its position clear last month. In a letter to NSF, it emphasised that high-cost credit and protecting vulnerable consumers is at the heart of everything it does. Since then, the FCA has faced severe criticism and likely Commons hearings over its lax scrutiny of the collapsed mini-bond firm London Capital & Finance (LCF).
The better-off customers of LCF and poor clients of NSF/Provident could not be more different in terms of the sections of society served. The high-cost lending market is the province of the most desperate in society.
The very idea that Provident clients should find themselves at the heart of a financially-driven takeover run by an overweening, ethically indifferent entrepreneur is unacceptable.
Every day which passes is more uncertainty for customers who don’t deserve to be pawns in a down and dirty City battle.
Keep running
THE rise and rise of JD Sports speaks volumes for the staying power of its principal owners, the Rubin family-controlled Pentland group. Unlike Mike Ashley of Sports Direct, who likes to buy retailers for the hell of it, JD Sports has a sense of direction.
Profits, at £340m, are motoring along with store sales as it takes advantage of athletic wear as fashion. One would normally caution any UK retailer taking aim at the American market, given the number of firms that have come a cropper.
But there ought to be optimism about JD’s assault through its purchase of Finish Line. Pentland has good form in the US, dating back to when it turned an unknown footwear company, Reebok, into a global superbrand. Investors are certainly putting their trust in JD, with a market value of £5.6bn. It is now worth three Sports Directs and more than Marks & Spencer, and the FTSE 100 could soon beckon.
Who would have thought?
Well done
FRENCH patriotism is boundless in a way which is different to the UK.
Francois Pinault, owner of Chateau Latour, was the first to pop up with €100m (£86.5m) to rebuild Notre Dame, only to be outdone a few hours later by fellow billionaire Bernard Arnault, of LVMH, with a €200m (£173m) donation. Not to be left out L’Oreal, along with the controlling Bettencourt Meyers families, pledged €200m.