Amigo Holdings PLC (LON:AMGO) founder James Benamor is to step down from the board at the end of September just under three months after the loans company’s £1.3bn London stock market debut.
Benamor is resigning because his Richmond Group Limited, a major shareholder in Amigo, no longer wishes to be represented on the board of directors. Amigo said Richmond wants to focus on "private investments in which it can play an active role".
Richmond, which invests in early-stage companies and provides mezzanine debt, bridging and asset-backed finance to firms, will retain its rights under a relationship agreement entered into with Amigo in June.
Amigo could join FTSE 250
Amigo began trading on the London Stock Exchange on July 4 and is a possible candidate to join the FTSE 250 in the latest quarterly reshuffle of the FTSE indices, which will be announced on Wednesday.
READ: McCarthy & Stone set to drop out of the FTSE 250 in quarterly reshuffle
The initial public offering priced Amigo shares at 275p each, allowing Richmond and a group of senior managers to sell stock worth £326.8mln.
Benamor, who founded Amigo 12 years ago, was expected to take home just under £270mln from the share sale and be left with a continued holding in the business worth more than £800mln.
He could receive more cash if joint bookrunner and sole sponsor, JP Morgan, exercises a so-called over-allotment that would allow him to sell more shares as part of a share price stabilisation scheme.
Following the IPO, Benamor is now close to entering the ranks of the UK’s 100 richest people with an estimated cash fortune of about £1.1bn.
IPO lock-up arrangements
Benamor's vehicle Richmond was subject to a 180-day lock-up arrangement from the first day Amigo began trading, preventing it from selling stock during the period to avoid a possible hit to the share price.
Other selling shareholders are under a three-year lock-up period, whereby one-third of their respective shares will be released each year following admission to trading.
Directors and senior management are subject to a 365-day lock-up period.
Since the IPO, shares in Amigo have fallen to 243.15p at the time of writing.
Amigo accused of manipulating affordability checks
Just two weeks after it began trading, Amigo lost £140mln in market value when a report by The Times alleged the company was exploiting vulnerable customers.
READ: Newly-listed Amigo reports sharp rise in quarterly revenues amid loans scandal
Former Amigo employees told the newspaper the lender was allowing customers to manipulate affordability checks and was pursuing “aggressive” court action against thousands who miss payments.
The Financial Conduct Authority has said it would investigate the claims, which Amigo has denied.
Many of Amigo’s borrowers have a poor credit history and are required to enlist a guarantor on loans.
Amigo, the UK’s largest guarantor lender with an 88% share of the market, offers small loans of up to £10,000 on a term of one to five years at an annual interest rate of 49.9%.
Amigo founder's previous scandals
It is not the first time Benamor has been the subject of unfavourable media attention.
In 2008, a BBC Inside Out investigation claimed Benamor's companies including Advantage Loans, which offered to arrange loans for people with a poor credit history before it ceased trading the same year, made money allegedly from a “simple scam”.
Some customers paid a £50 brokerage fee, convinced they would have their loan application approved but they were rejected and sent the phone numbers of other banks and lenders, the BBC alleged.
Benamor has denied misleading clients.
In 2008, Benamor featured on Channel 4 reality TV show The Secret Millionaire, in which millionaires go incognito into poor communities and agree to give away tens of thousands of pounds. On the programme, Benamor said of his youth: “I was taking a lot of drugs, became a petty criminal really. I was a nightmare.”