Schroders has forcefully rejected a doorstep lender’s hostile takeover bid for Provident Financial, of which Schroders is the third largest shareholder.
The asset manager sent a letter to Provident chairman Patrick Snowball yesterday, saying Non-Standard Finance’s hostile takeover bid is “destabilising” and brings “regulatory risks and uncertainty.”
The £1.3bn bid, which was made in February, is backed by 51 per cent of Provident shareholders and is led by NSF chief executive, and former Provident chief executive, John van Kuffeler.
At the time, shareholders were asked by the lender not to take action.
Schroders owns a 14.6 per cent stake in the Bradford-based consumer finance group which has been trying to get back on track since a restructure of part of the business two years ago led to profit warnings.
The letter states: “Schroders does not believe that NSF’s offer is in the best interest of PFG shareholders. PFG has faced a number of issues in recent years, but the Q1 trading statement shows that it is on track with its recovery and rehabilitation.
“In our view, NSF’s bid risks destabilising this recovery, and brings additional regulatory risks and uncertainty.”
Schroders faces a difficult situation as three major Provident Financial shareholders also own key holdings in the company making the bid.
The letter continues: “NSF faces a number of operational and regulatory challenges, including an FCA investigation of its guarantor lending business.
“We do not believe the shareholders of Provident who are also collectively majority shareholders in NSF (namely Woodford, Invesco and Marathon) should be seeking to impose the challenges of the latter company on the former.”
NSF has previously accused Provident executives of mismanaging the company.