Neil Woodford’s sharing a £300m windfall after Provident Financial’s surprise share price leap
Embattled fund management duo Woodford and Invesco have today shared profits of more than £300m on Provident Financial’s meteoric rise.
With Provident’s shares 75 per cent higher, more than £600m has been added to Provident’s market valuation in around three hours.
Neil Woodford’s eponymous fund house and his former employer Invesco own 48 per cent of Britain’s biggest doorstep lender.
Today, Woodford said it expects Provident to rebuild its reputation as a “premier” sub-prime lender.
Why did Woodford back Provi?: Woodford throws his weight behind Provident… and he had to
Provident Financial, which was last year subject to one of the FTSE 100’s biggest one-day sell-offs, this morning announced a £300m rights issue. It also sought to draw a line under two separate investigations by the Financial Conduct Authority. Fines and redress are to cost the Bradford-based lender around £200m.
The figures for both the rights issue and the fines were well below market expectations.
Provident’s return to form will provide Woodford with a timely boost, after booking more than £1bn in losses in 2018 alone. Between May and December 2017 he lost £2bn.
Some of his biggest trades have turned sour. He is a major shareholder in the likes of Capita, Purplebricks and the AA – all of which have huge chunks wiped off their market capitalisation.
Today, a Woodford spokesperson said:
We can now look forward to this company returning to normal through the remainder of this year and into 2019 with a stronger balance sheet, an investment grade credit rating, a 10 per cent return on assets and in excess of a 25 per cent return on equity.
We expect the business to establish an industry leading working relationship with the regulator and to rebuild its reputation as the premier company in this significant and underserved part of the credit market.
Read more: Provident share price jumps 87 per cent: Reaction from City analysts