- British subprime lender Non-Standard Finance said on Tuesday it was seeking to raise around 80 million pounds ($112.98 million) in the third quarter potentially through a share sale that would be backed by its largest investor Alchemy.
NSF, however, said the equity raise depended on talks with the Financial Conduct Authority concerning a proposed compensation payment scheme for some customers of its guarantor loans business.
NSF, whose loan book at the end of a pandemic-hit 2020 was just two-thirds of what it was a year earlier, flagged in February that it needed more capital in order to avoid covenant breaches.
Over the past year, complaints have surged against guarantor loans, which typically require a friend or family member to guarantee they will take on repayments if the borrower falls behind by companies. (https://reut.rs/3wq7ald)
London's High Court last month rejected guarantor lender Amigo's rescue plan that would have cut compensation payouts to customers for mis-selling loans, pushing the company to warn of a potential insolvency.
Another major subprime lender Provident Financial , which rebuffed a bid from NSF in 2019, said it plans to close its doorstep lending arm and exit the home credit market altogether after complaints against the business mounted.
($1 = 0.7081 pounds)
