LONDON (Reuters) - British subprime lender Amigo plc (L:AMGO) has launched a strategic review and formal sale process, it said on Tuesday, following a challenging year for the Bournemouth-based company.
The loans guarantor said it had received indications of interest from several parties, and had entered into non-disclosure agreements with them. Discussions are ongoing, Amigo said, adding that there was no certainty an offer would be made.
The company, which issues loans typically guaranteed by a borrower's family or friends, has been hit in recent times by a tough economic outlook and regulatory pressures.
The specialist lender came 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. 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%.
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.
In December, the company's chief executive Hamish Paton stepped down after less than five months on the job, while Chairman Stephan Wilcke also decided to quit and informed the board he would not seek a new mandate in 2020.
RBC Capital Markets is lead financial adviser on the sale process and corporate broker to Amigo. Houlihan Lokey has been appointed as joint financial adviser.