Secured Loans PLC
Ever since I was a wee lad in short trousers, I’ve always wanted to know how things work. In fact I rarely comment on something unless I’ve learnt thoroughly about it and formed an opinion in advance [an exception here is football - I know nothing about it - but to be a ‘modern man’, sometimes profess to].
Since I moved into the secured loans sector it’s been a joy to look under the bonnet of all the things that go on - the infrastructure - regulation and the dog eat dog world of Internet marketing.
Today I’ve been having a look into the companies that deal with secured loans listed on the London Stock Exchange. Two things that intrigue me are - only one is a FTSE 100 and ‘household name’ and many of the others are comparatively new listings.
Barclays PLC (BARC) is the FTSE 100 Company and, as mentioned in another post, deals in secured loans within its consumer lending division Barclaycard under the name Firstplus. There’s not really much else to say about Barclays except that under the Firstplus brand they must come somewhere near to the top in Internet advertising spend. They are an extremely aggressive advertiser and by some quirk of calculation always seem to get their loans to the top in listings on sites like Moneysupermarket.
Debts.co.uk PLC (DETS) is one of the new listings and floated in May this year at a price of 180p (now 213p). It also trades using the name Debt Counsellors, deals in IVAs as well as secured loans, is moving into larger premises and next year hopes to enter the mortgage market. Its maiden results to the year-end July 31st don’t come out until sometime in October. Probably as a result of the funds it got on floatation, it has said it is going to substantially increase its marketing spend (I just hope Carol Vorderman hasn’t got a twin sister they can employ!).
Compass Finance Group PLC (CAF) was admitted to AIM in March 2004 at a price of 48p (now 38.5p). As well as secured loans it deals in IVAs, mortgages, re-mortgages, insurance and unsecured loans. Earlier this year it raised £4.15 million to fund the acquisition of ‘The Debt Advisor’ and ‘The Business Debt Adviser’. Quite worryingly for a high margin business £3.15 million of this is to fund growth and support working capital and follows the raising of over £2million earlier in the year. Perhaps this is why the shares are down in price from flotation!
Debtmatters Group PLC (DEBT) floated in June 2005 at 65p (369p). It primarily dealt with IVAs and after sustained profit and turnover growth bought Bolton based Loanmakers in June this year. Loanmakers is one of the larger players in the secured loans business. Debtmatters bought Loanmakers for an initial cash consideration of £10million with an ‘earn out’ over the next 24 months of up to another £9million in a mixture of cash and shares.
Elephant Loans and Mortgages PLC (ELEP) floated in November 2005 at a price of 3p (now 3.75p). Elephant deals primarily in secured loans but in March this year launched Debtsmashers an IVA subsidiary. Quite interestingly at the time of the launch Elephant said that only 35% of secured loan applicants actually received a loan and Debtsmashers would offer its services to the remaining 65%
Another company that deals in secured loans, but to a lesser extent is Cattles PLC (CTT). Cattles offers secured loans but only up to £25,000 through its dial4aloan brand.
Another group One Finance was expected to list on AIM earlier this year, but for various reasons felt the time wasn’t right. One Advice deals under the trading names Allclear, Ask and One Advice and is expected to float either later this year or next year.
So there we have it, that’s the complete picture of secured loans businesses listed on the London Stock Exchange. As alluded to earlier, it is interesting that Elephant, Compass, Debts.co.uk and Debmatters have all floated within the last 18 months.
