Shop Direct gets £75m injection from Barclay brothers as it looks to plug PPI funding hole
Shop Direct has been given a £75m equity injection from its parent company as it looks to plug a funding gap from the cost of recent payment protection insurance (PPI) complaints.
The online retailer owned by the billionaire Barclay brothers said today that £75m will be invested by way of an equity injection before the end of this month.
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The Littlewoods.com and Very.co.uk owner will continue to evaluate alternatives for the remaining £75m, including both equity and debt financing options.
However, the group said that the second tranche of capital was not immediately required.
Last month the retailer revealed it had seen higher-than-expected demand for PPI compensation, with payouts coming to £169m in the year to 30 June following a late surge in claims ahead of an August deadline that was set by the Financial Conduct Authority.
Its business model centres on selling clothes, electrical goods and homeware to customers on credit, but the rush in claims from customers left the firm needing £150m to plug a gap.
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“Whilst the group has no immediate need for funding, £75m will shortly be invested in the business by way of equity injection from SDHL into Shop Direct, demonstrating the continuing support and commitment of our parent company,” it said in an update this afternoon.
The group said there are no near term liquidity requirements and it is keen to ensure that it has fully explored its financing alternatives to ensure that the best terms are achieved.
The fresh injection from the Barclay brothers comes amid speculation that the media-shy twins are looking to offload parts of their business empire.