Key points:
- Amigo shares edged 3.21% higher after appointing new advisers.
- Investors barely reacted to the news despite its significance.
- The lender is getting ready to announce the mandated capital raise.
The Amigo Holdings PLC (LON: AMGO) share price edged 3.21% higher today after the guarantor lender announced the appointment of Peel Hunt LLP as its financial adviser and sole corporate broker with immediate effect.
Amigo also appointed Ashcombe Advisers LLP as financial adviser to the company. However, investors muted reaction to the news does not reflect the real significance of the appointments, which brings the lender a step closer to the much-awaited capital raise via a share issue.
Also read: Best Financial Stocks To Buy Right Now.
A crucial part of Amigo’s New Business Scheme is centred around the company raising a significant amount of money to pay off some of the aggrieved customers and raise its capital base to resume its lending activities fully.
Today’s appointment signals that Amigo is working on the planned share issue with the two firms appointed as advisers to ensure that the terms of the capital raise are in line with the FCA’s requirements.
Amigo Loans had confirmed in a previous update that it was working closely with the UK’s Financial Conduct Authority (FCA) to ensure that everything it does is aligned with the FCA’s expectations to avoid suffering significant setbacks like it did in the past.
Therefore, while today’s news did not generate significant interest from investors, it is a small step in the right direction for the guarantor lender. As regular readers know, the demand for Amigo’s sub-prime loans has intensified since the company stopped lending in 2020.
The lender should have no shortage of customers once it resumes lending activities under its new brand RewardRate. Amigo is looking to put its shady past behind it by making all its charges available to potential customers from the very beginning.
Investors should brace themselves for the inevitable dilution once the lender announces the expected share issue to raise much-needed funds.
*This is not investment advice. Always do your due diligence before making investment decisions.
Amigo share price.
The Amigo share price edged 3.21% higher to trade at 5.15p, rising from Monday’s closing price of 4.99p.
