LONDON (Reuters) - British subprime lender Amigo AMGO.L said it was talking to potential buyers after launching a strategic review and sales process last month, sending its shares up 8%.
Amigo, which issues loans typically guaranteed by a borrower’s family or friends, said on Tuesday it had received indications of interest from several parties and had entered into non-disclosure agreements with them, though there was no certainty an offer would be made.
"We have already been of the strong view that there would be significant interest in this business - and we think Provident Financial PFG.L will pursue discussions," analysts at Goodbody said in a note.
A spokesperson for Provident declined to comment.
(GRAPHIC: Amigo plc shares bounce off lows - )
Amigo offers loans of up to 10,000 pounds ($12,277) to borrowers with weak credit histories at an average annual percentage rate of 49.9%.
It has been hit in recent times by a tough economic outlook and regulatory pressures, coming under scrutiny from the Financial Conduct Authority last year on concerns that some of its clients would be caught in a loan trap on high interest rates.
In August, its shares were hit after it reported a rise in first-quarter impairments and costs and warned of slower annual growth in its loan book.
Amigo also said on Tuesday it did not intend to nominate a second director to the board as previously stated, a move that suggests founder James Benamor is pleased with progress in the sales process, Goodbody said.
Benamor last year returned as a non-executive director at Amigo, a move that was followed by the exit of Amigo’s chief executive Hamish Paton and chairman Stephan Wilcke.
RBC Capital Markets is lead financial adviser on the sale and is corporate broker to Amigo. Houlihan Lokey has been appointed as joint financial adviser.
Reporting by Abhinav Ramnarayan; Editing by Edmund Blair and David Holmes
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