Shares in Amigo crash as founder puts it up for sale
Firm dubbed ‘legal loan shark’ hits new low
SHARES in Amigo Holdings crashed to a record low after its founder put the troubled firm up for sale.
The stock fell as much as 47pc in early trading before closing down 28.5pc, or 19.4p, to 48.6p.
The rout came after James Benamor, who owns 60.7pc of the ‘legal loan shark’ through his investment company Richmond Group, said he was willing to sell his stake, pushing the company to launch a formal sale process.
Bournemouth-born Benamor, a father of eight who set up the Richmond Group in 1999 at the age of 21, is sitting on a stake worth £140m.
Those shares would have been worth nearly £800m when the company floated on the stock market at 275p a share in 2018. The shares have fallen ever since and Amigo hobbled through 2019 amid increased regulation and a rise in the number of borrowers struggling to pay back their loans.
Analysts said 42-year-old Benamor ( pictured) now seemed to be cutting his losses by putting his stake up for sale.
Russ Mould, investment director at AJ Bell, said: ‘Richmond has sent a signal to the market that it sees little chance of value generation in the near term.’
Set up by Benamor in 2005, Amigo targets customers with a poor credit score, often on a low income, and offers them highinterest loans with rates of up to 49.9pc. The borrower must choose a family member or friend to act as a guarantor to pay back the money if they cannot do so themselves.
In 2018, Labour MP Stella Creasy branded Amigo a ‘legal loan shark’ which is ‘trying to claim respectability’.
And Amigo came under fire last year from the Financial Conduct Authority for giving inadequate information to guarantors, many of whom did not realise quite how much they may have to pay out if their friend or relative defaulted on the loan.
A person who borrowed £4,000 from Amigo over the course of three years, at its maximum interest rate of 49.9pc, could end up with a £7,026 bill.
One Daily Mail reader who acted as a guarantor for a younger relative ended up having to sell her car to pay back the loan.
Amigo said it would consider getting rid of the whole company or parts of it, reorganising it, or selling the UK business.
Benamor was chief executive until 2015, stepped down from the board in 2018 but returned last year as a non-executive director as former chief executive Hamish Paton and chairman Stephan Wilcke were ousted.
Gary Greenwood, of broker Shore Capital, said the sale was an attempt by the entrepreneur to ‘jump ship’, and said it was likely customer complaints were becoming a ‘significant issue’ for Amigo, which is valued at £231m.
The lender had 222,800 customers at the end of September and was hit by 226 complaints to the Financial Ombudsman in six months, 59pc of which were found in the customer’s favour.