Amigo Shares Fall As Investors Wait For Updates From the Lender

The Amigo Holdings PLC (LON: AMGO) share price fell 5.16% today as investors wait for updates from the guarantor lender. Many are waiting for Amigo to announce the much-awaited capital raise, despite the massive dilution of existing shareholders.

The capital raise will see the company issue 19 shares for each outstanding share, which is the last crucial step the lender must satisfy before being allowed to resume lending activities. The firm is yet to reveal the details of the planned capital raise.

The last significant announcement from Amigo Loans was in late November when the company released its half-year report showing that its revenue had fallen sharply as it continued running off the loans on its books. 

Amigo Loans has launched a new lending portal known as RewardRate, which will be its customer-facing brand as it seeks to put its checkered past behind it. The lender is currently running a pilot lending program to test the platform’s robustness and efficiency.

Meanwhile, investors should be patient as Amigo works out the details of the upcoming capital raise and secures the much-needed backing from institutional investors, who are likely to be the biggest buyers of the new shares. 

Luckily, demand for Amigo’s sub-prime loans has risen significantly since the company stopped lending in September 2020. The COVID-19 pandemic forced many people to default on their loans, pushing them away from traditional lenders such as banks and building societies. 

Therefore, the proportion of people seeking guarantor loans has risen as some lenders exited the industry due to the increased regulatory scrutiny and difficult operating conditions amid a public outcry about the high interest rates charged by subprime lenders. 

Investors should adopt a wait-and-see approach towards Amigo until the lender unveils its capital raising plan,w which must be approved by the UK’s financial regulator, the Financial Conduct Authority (FCA), before being implemented. 

Meanwhile, those interested in Amigo’s loans and new lending terms should check out the RewardRate website, which is operational and is running a pilot lending program. 

*This is not investment advice. 

Amigo Loans share price.

The Amigo Loans share price was trading down 5.16% at 4.41p, from Thursday’s closing price of 4.65p.