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Amigo Shares Crashed 44% Amid Struggle To Find a Lead Investor

Simon Mugo trader
Updated 16 Jan 2023

The Amigo Holdings PLC (LON: AMGO) share price crashed 44.4% after revealing that it was struggling to secure a lead investor for the 19:1 equity raise mandated by the High Court as part of the approved scheme of arrangement.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


However, the guarantor lender noted significant minority interest from investors willing to participate in the capital raise. The company reassured investors that it would do its best to secure the necessary backing for the £45 million capital raise.

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY

Amigo further updated investors about the progress of its pilot lending scheme via its RewardRate brand, which has run for the initial two-month period and has been extended to allow for an unknown period until the capital raise is completed.

The subprime lender warned that it had issued a minimum number of loans under the pilot programme due to its cautious approach to lending and its focus on testing its new technology platform and lending processes. 

The company also noted that the prevailing macroeconomic climate, where many consumers are struggling with the high cost of living crisis, had informed its cautious lending approach.

Amigo continues to apply the learnings from its pilot programme to improve the customer journey and products and assured investors that loan originations would subsequently increase. 

The firm expects to start third-party testing of its processes and outcomes later this month to provide further assurance regarding its systems and controls. 

After the pilot lending phase is completed, the UK’s Financial Conduct Authority (FCA) will assess the broader impact of Amigo’s resuming lending activities on consumers. 

Investors’ adverse reaction to today’s announcement was justified since many expected Amigo to have an easy time getting a cornerstone investor in the planned capital raise, which is not the case given that no investor has committed to leading the capital raise. 

However, all is not lost; Amigo has appealed to professional investors interested in participating in the capital raise to contact its brokers, Peel Hunt or Ashcombe Advisers, this week to register  their interest.  

The lender said that the fallback plan of liquidating the company remains an option if the capital raise fails. 

*This is not investment advice. 

Amigo share price.

The Amigo share price crashed 44.36% to trade at 2.17p, from Friday’s closing price of 3.90p.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading