Just as FlexiGroup shares recover, rumours of delisting surface
SCOTT MURDOCH JUNE 07, 2018It has been some time since listed lender FlexiGroup has made headlines, but while the group’s board is lying low, some wonder whether another privatisation attempt is back on.
Rumours have surfaced in the past fortnight that the consumer and commercial lender may be heading for a delisting in a move that would no doubt be prompted by its founding chairman Andrew Abercrombie, who controls just over 24 per cent of the stock.
The timing may seem odd, given shares in FlexiGroup have just started to rally after a boardroom bust-up about two years ago.
But Abercrombie has been rumoured before to have considered such a move and market analysts and shareholders say it would come as no surprise if he was working something up behind the scenes with a private equity firm.
In 2015, TPG Capital, Kohlberg Kravis Roberts and investment bank Macquarie were all said to have approached the company.
KKR considered a deal where it would buy not only FlexiGroup but the General Electric Consumer Finance operation which was sold around the time to KKR, Varde Partners and Deutsche Bank for $8.3 billion. KKR progressed on the plan but it is understood it was unhappy about paying 16 times FlexiGroup’s earnings for the business (the ratio it was trading at then) when it was buying the GE business at about 12 times earnings.
Another off-putting factor for the private equity group was that Abercrombie was understood to have been keen to be a shareholder of the new GE and FlexiGroup entity.
While there were rumours at the time about private equity circling Flexi, National Australia Bank also had sounded out an acquisition of the company, about four years ago.
The bank is understood to have become nervous about one of Flexi’s products, where money continued to be debited from a customer’s account even after the loan was paid down and it was a situation where it was up to the customer, not the lender, to discontinue the direct debit payment.
The bank feared it might have been liable for large customer repayments.
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It has been some time since listed lender FlexiGroup has made headlines, but while the group’s board is lying low, some wonder whether another privatisation attempt is back on.
Rumours have surfaced in the past fortnight that the consumer and commercial lender may be heading for a delisting in a move that would no doubt be prompted by its founding chairman Andrew Abercrombie, who controls just over 24 per cent of the stock.
The timing may seem odd, given shares in FlexiGroup have just started to rally after a boardroom bust-up about two years ago.
But Abercrombie has been rumoured before to have considered such a move and market analysts and shareholders say it would come as no surprise if he was working something up behind the scenes with a private equity firm.
In 2015, TPG Capital, Kohlberg Kravis Roberts and investment bank Macquarie were all said to have approached the company.
KKR considered a deal where it would buy not only FlexiGroup but the General Electric Consumer Finance operation which was sold around the time to KKR, Varde Partners and Deutsche Bank for $8.3 billion. KKR progressed on the plan but it is understood it was unhappy about paying 16 times FlexiGroup’s earnings for the business (the ratio it was trading at then) when it was buying the GE business at about 12 times earnings.
Another off-putting factor for the private equity group was that Abercrombie was understood to have been keen to be a shareholder of the new GE and FlexiGroup entity.
While there were rumours at the time about private equity circling Flexi, National Australia Bank also had sounded out an acquisition of the company, about four years ago.
The bank is understood to have become nervous about one of Flexi’s products, where money continued to be debited from a customer’s account even after the loan was paid down and it was a situation where it was up to the customer, not the lender, to discontinue the direct debit payment.
The bank feared it might have been liable for large customer repayments.
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