Shares in the doorstep lender fell to 571p within the first 15 minutes of trading on Monday, down 13% from Friday’s close of 656.6p.
Though its share price recovered slightly, rising to 587p by mid-morning, it was still the biggest FTSE 250 faller, followed by AA (-5.83%), another Neil Woodford majority-owned company.
Provident Financial’s shares were rattled by reports over the weekend suggesting that management is planning to raise as much as £500m to pay off forthcoming fines and fix the firm’s balance sheet.
Senior bankers alluded the rights issue could be unveiled as early as Tuesday when the consumer credit firm is set to report its annual results, UK newspaper The Sunday Telegraph reported.
Reports added that investment bankers Cazenove and Barclays have led discussions with investors and will likely serve as underwriters on the deal if it progresses.
A number of equities analysts have reiterated their “sell” and “underweight” ratings of the stock in recent weeks, including Liberum Capital, Canaccord and Barclays, predicting further downside in the share price.
Turbulent year
Provident Financial has already endured a bumpy start to 2018, after a turbulent year of consecutive profit warnings, Financial Conduct Authority probes into two of its key businesses and the resignation of head boss Peter Crook.
In its last trading update, the subprime lender said investors should brace themselves for a full-year pre-exceptional loss of £115m, worse than its previous guidance suggested.
The firm’s trials and tribulations over the last year has foisted attention onto one of the UK’s biggest fund managers, Woodford, who remains the largest investor in the business. As at 15 January 2018, Woodford owned 24.34% of the subprime lender, followed by Invesco Perpetual’s Mark Barnett, who owns 22.11%. Both Woodford and Barnett suffered redemptions from their equity income funds last year as a number of key holdings proved a drag on performance.
Recently, a number of Woodford and Barnett-owned firms have admitted to having cash issues, including small-cap companies Itaconix and RM2 International.
Provident Financial unveils its annual results on Tuesday.
