The future could still be golden for Amigo Loans shareholders
It’s been a rough old ride for the shareholders of Amigo Loans.
The company began life as a subprime, guarantor lender in 2005 and picked up a load of customers fast, helped along by its weird TV adverts featuring blue plasticine figurines. It listed on the London Stock Exchange in 2018 and the shares initially did well, reaching a peak market cap of £1.5bn. But things soon went south.
There were questions about the firm’s governance processes from the moment of its IPO, and the regulator began probing its lending practices, under which customers were issued loans at interest rates as high as 50 per cent.
A feud broke out between the company’s board and its flamboyant founder, James Benamor. Benamor threatened to sell a one per cent stake in the company per day, every day until the board was replaced. The board didn’t budge, so off Benamor went.
By 2020 the stock had tumbled more than 80 per cent, with Bloomberg describing it as a “new contender” for “London’s worst IPO award.” Then things went bad to worse.
An investigation by the Financial Conduct Authority found Amigo had “failed to assess properly the affordability of its lending, especially to vulnerable consumers.”
In 2023 the FCA said Amigo was due a fine of £73m – but that the company was in such a poor state, it probably couldn’t afford the fine anyway.
Amigo tried raising more cash to carry on lending, but after limited investor interest it quickly gave up and began winding down operations.
With the shares worth virtually nothing, the few remaining staff at Amigo had a try at some other stuff. At one point, the firm was in discussions with investors to turn itself into a music and film streaming market to create “some small value” for shareholders. To everyone’s shock, that plan didn’t pay off.
Then last year, another roll of the dice. The company brought in Scottish turnaround specialist Jim McColl – a man who transformed the fortunes of small London-listed business Clyde Blowers into a big multinational turning over £1.3bn. Could Blowers pull it off all over again? …No.
But now, Amigo has found a new mate – and this time, he’s Australian. The arrival of Craig Ransley, a seasoned mining executive, could yet dig up gold for Amigo’s shareholders, who are currently sitting on stock worth 0.3p.
Ransley wants to turn Amigo into a mining company – and is set on developing two gold and rare earths opportunities in Tanzania that he’s “spent twelve months looking at.”
“It’s probably the most friendly jurisdiction in Africa to work in,” Ransley tells me.
“I’ve got very strong relationships on the continent from the top level down, and Tanzania is a very good environment to work in – it’s safe, it’s respected and the money goes in and out of the country easily from an exchange perspective.”
Like Amigo, Ransley knows a thing or two about getting fined. He was previously a director of Australian mining firm TerraCom, and in 2019 was one of four directors named in a probe by financial regulator ASIC after a whistleblower raised concerns over the manipulation of coal quality test results.
In May, TerraCom agreed to pay a $7.5m fine for one admitted contravention of the Corporations Act and $1m for ASIC’s legal costs.
For Amigo, however, Ransley has already secured £1.5m from investors and is ready to get the project off the ground, insisting that he’ll “bring back some serious institutions to the register” as soon as “everything I’ve got in my bag of tricks will come into fruition.”
But why did Ransley pick adopting a shell listing over floating a new company?
“It’s faster than going through the front door – and the ease of getting funds when we’re in the market that we’re in, especially with gold and rare earths, maybe it’s twice as fast.”
And why Amigo? “Because Amigo means mate, right…and being an Aussie, mate, ‘mate’ is a good word.”
Fair enough.