On Friday morning, doorstep lender Provident Financial PLC (LON:PFG) was hit with a £1.3bn takeover bid by Non-Standard Finance PLC (LON:NSF), a rival consumer finance company headed by its former chief executive, John van Kuffeler.
More intriguingly, three of Provident’s major shareholders, Woodford, Invesco, and Marathon, are also key stakeholders in NSF, and with over 50% of the shares in both, many believe the takeover is a done deal.
But who exactly is van Kuffeler, and why has he now chosen to try and return to the helm of Provident, having left to set up NSF just 5 years ago?
Despite being a descendant of the Flemish aristocracy (not exactly the common perception of a sub-prime lender), John de Blocq van Kuffeler has been operating in the sector for over a quarter of a century.
After an eight-year stint at private bank Brown, Shipley & Co, Kuffeler joined Provident as its group chief executive in 1991, becoming its chairman in 1996 and remaining in post for 17 years.
Over his tenure, Kuffeler presided over Provident’s ascension to the FTSE 100 as well as the establishment of its international division and the creation of Vanquis Bank, the firm’s credit card provider.
Kuffeler then left Provident on the last day of 2013 to go on and found Non-Standard Finance the next year, raising around £103mln through its listing on the London Stock Exchange, with the purpose of acquiring consumer credit companies in the subprime sector.
Currently, NSF has three main businesses; doorstep lending under the Loans At Home brand to people usually earning between £10,000-£15,000, its branch-based operation called Everyday Loans which specialises in people earning between £25,000-£30,000 with bad credit history due to missed utility payments or county court judgments, and Trusttwo, a lender for people that can find a guarantor.
But why has he come back?
Seeing as he only left Provident six years ago after a long 22-year stint at the firm, many will be questioning why Kuffeler is seeking a return to the firm now.
According to Anthony Da Costa, analyst at Peel Hunt, the move could probably have been in the offing for a while despite its surprise revelation to the market and could have been more to do with the companies’ mutual major shareholders than Kuffeler’s nostalgia.
Da Costa says that previously undisclosed discussions over a takeover had previously taken place a year ago, but Provident’s management had walked away, adding that an announcement from its board after the offer was announced appealing for shareholders to take no action indicated they probably knew nothing about the impending takeover.
“The NSF team has been eyeing Provident and have offered the major shareholders a position where they would go in and fix the firm and potentially increase their returns,” Da Costa said.
Given that both Provident and NSF’s share prices have not performed that well recently, falling 25% and 10% respectively over the last six months prior to the announcement, the major shareholders in both firms have likely been galvanised to push for a faster pace of change.
In late-afternoon trading Friday, Provident’s shares were up 14% at 583p, while NSF’s shares were up 12.8% at 65p.