Tuesday 07 May 2019 4:47 pm | Updated: Wednesday 05 June 2019 9:10 am

Provident handed boost in bid to fight off Non-Standard Finance as Schroders rejects hostile takeover bid

Provident’s third-largest shareholder Schroders has refused to support Non-Standard Finance’s £1.3bn offer in a blow for the subprime lender’s takeover bid.

The UK fund manager, which holds a 14.6 per cent stake in Provident, said the offer was not in the best interests of Provident shareholders.

Non-Standard Finance’s (NSF) offer has gained the support of more than 50 per cent of Provident shareholders, including star trader Neil Woodford, Invesco Asset Management and Marathon Asset Management.

The trio also hold a stake in Non-Standard Finance.

In a letter to Provident chairman Patrick Snowball, Schroders fund manager Kevin Murphy said he was concerned that the rights of minority shareholders were “not being protected.”

He added: “Schroders does not believe that NSF’s offer is in the best interest of Provident shareholders.”

Murphy said that following a number of issues in recent years, the company’s recent first quarter trading update showed it was on track with its recovery and rehabilitation.

He added: “In our view, NSF’s bid risks destabilising this recovery, and brings additional regulatory risks and uncertainty.”

“The best interest of Provident shareholders would be best served by the existing management continuing to execute on their recovery plans."

Earlier today Provident was forced to clarify that a series of performance targets it issued as it fought off a hostile takeover from rival Non-Standard Finance (NSF) were not official profit forecasts.

In a trading statement last week Provident outlined its “vision for the future” in an attempt to persuade shareholders to vote down NSF’s takeover bid.

The doorstep lender said it would target a return on assets of approximately 10 per cent for the group as a whole and a return on equity of between 20 to 25 per cent by 2021.

“For the avoidance of doubt, the performance targets stated above are not intended to forecast a particular level of profit and, as a consequence, it is not possible to derive a profit figure for any future period,” Provident said in a clarification this morning.

NSF attacked Provident over it’s clarification and urged shareholders to accept the takeover offer by next week’s deadline.

"Provident's ability to deliver on its promises remains uncertain: the business is not performing anywhere near its potential and 'more of the same' is not working,” NSF chief executive John van Kuffeler said.

“This is reinforced by the clarification Provident has been required to make this morning regarding its future performance targets issued only last week. Change is required and the time for such change is now.

“As we approach 15 May, we urge all shareholders that have not yet accepted our offer to do so as soon as possible."