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I reckon about half of the £80m raise is necessary to strengthen the balance sheet which has been hit by (1) reduced lending at EL division over the months of lockdown and (2) no new lending in the GL loans division and (3) provision of £16m re. FCA review. We can expect a £20-£25m loss for 2020 when the accounts are published on 30/6.
The other half is about creating the dominant sub-prime lender in the UK, perhaps taking the place of PFG.

IMO, the important new information that came in today's RNS was the amount they want to raise. Until now they have talked about a 'substantial' raise. I had reckoned on that being in the £40-£50m range. But they want to raise a lot more than that, and it's taken the market by surprise.
On the positive side, it seems very unlikely that NSF will go bust.

Looking at how this fund-raising of £80m might be structured.
Maybe a Placing of 1 billion new shares to Alchemy at 5p, raising £50m.
Then maybe a 2 for 1 Open Offer to all shareholders at 5p (625m shares approx), which would raise approx another £30m.
After this total shares in issue would be 1.94bn and Alchemy would control 67%.
Does that look possible?

Barrie - I don't think we'll much more progress here until we get news from the FCA. But hopefully the SP will hold around the 4p level d for now, then rise to 5p if the FCA settlement is as expected.
As you say, there are still a number of risks here. But there's big upside if everything works out.

Neil Utley is several million £ in the red on NSF at this point.
I’m think he’ll support an equity raise, rather than selling out at 5p.

With Alchemy already in NSF and with a seat on the BoD, there is no way another institutional investor is going to invest in a major way.
You might see an adventurous fund manager taking 2% or 3%. But that’s about the limit of it.

Don777 - 2 tranches. That's an interesting idea. Let's hope that happens.
I see them going for £20m-£25m at 5p. So 400 - 500m new shares (312.4m currently in issue)
Underwitten by Alchemy. Retail investors given opportunity to participate.
Alchemy ends up with controlling shareholding.

demark - we all know that the terms of the capital raise will be dictated by Alchemy.
But we don't yet know what those terms will be!
There's an obligation to treat retail investors fairly. But this often doesn't happen.
RE the FCA timetable. I agree, it' s out of NSF's hands. But while it's unresolved it remains a big unknown risk here.
The big positive is that ELD is proving surprisingly robust and should have a good 2021.

This update seems to me generally positive. But it doesn't provide any new detail on the 2 big outstanding unknowns - the size of the FCA redress scheme for the Guarantor Loans division and the the details of the capital raise.
Interesting details in this are:
Net Loan book has shrunk 20% in 2020 - not too disastrous when you think how badly locked down their 'customer heartland' has been. Total loan book at 31/12/19 was £360m. So now £300m. That is still a substantial business.
Net loan book probably now looks like this:
ELD - £210m (almost stable)
GLD - £63m (-40%, effectively in run-off)
HC - £26m (-33%)
If revenue declines in line with the smaller loan book we are looking at FY revs of c£163m, so that means NSF is clearly going to report a huge loss for 2020. But the important thing is that it looks like it's going to stay in business.
It will be interesting to see whether retail investors get treated decently in the imminent funding-raise.

UT - I think the best source for up-to-date shareholdings is probably NSF's website.
This is showing large holdings at Hargreaves Lansdowne , at IG and at Interactive Investor. I'm sure these holdings represent the collective holdings of many dozens of PI's. I'm sure they are not Institutional holdings.

Unknown reader -I'm interested you think there are only 63m shares 'truly available'. Where do you get that figure from?
NSF has 312.4m shares in issue. Alchemy has 93.5m. Marathon has 33m. Neil Utley has 25m. These are the only known major shareholder, with a total of 151m shares (48.4% of total).
That leaves about 161m shares in unknown hands, probably of private Investors like you and me. This is all has to be considered part of the free float, IMO.

It's tough for the FCA. I mean. they only have 4,200 employees, who are all so busy shuffling around bits of paper between themselves that they fail to spot things like London Capital Finance taking investors for a ride for £250m.
Being serious, I agree that it's ridiculous they still haven't (as far as we know) got back to NSF yet after 6 months.

There's definitely going to be an equity raise, which the company has described as 'substantial'.
IMO, it's impossible to call where the SP goes until we see (a) the deal withe FCA over the the GL division and (b) the terms of the equity raise.
And there's always the possibility that our super-wealthy 30% shareholder (Alchemy Partners) decides to make an offer.

Hello Schaff. Welcome to NSF. It's a brave thing to buy into a company with so many current 'unknowns'.
NSF is definitely a high risk/high reward situation, as I'm sure you realise.
What's your view on developments over the next 6 months? Where do you see the SP a year from now?

It's good to hear that the Woolard Review has been published.

It sounds as though his priority is to regulate the 'Buy Now Pay Later' firms like Klarna and Affirm.

Hopefully the FCA will now engage with NSF re. redress mechanisms at the Home Loans Division and we can move on from the Limbo we seem to be in.

Alchemy with 30% they are the only possible buyer. What do you think they might pay?

DowntoEarth - I hope you are right, but NSF also admits that "the FCA has not yet reviewed the proposed methodology and supporting analyses'. So there's bit of bluff going on from NSF, to be honest. They know the market wants to see a number, so they have come up with one.

NSF's loan book is around £300m.
We don't yet know details re. the FCA's concerns about the Guarantor Loans division, but the company has provisioned £16m against a redress scheme. It's anyone's guess whether this will be too much or too little.

Fastfood - Hardman's view seems to be that Alchemy can go over 30% without making an offer, and they have done this with other companies. I agree it's confusing because the Take-over Code is pretty clear about the 30% rule.
From Hardman November note:
"NSF was already in advanced discussions with major shareholders about an equity
raise before the guarantor loan review was announced. We understand that
commentators had quite a range of outcomes (£15m to £40m), and we would expect
this to increase by at least the amount of redress provisions (i.e. to £30m to £55m).
Given Alchemy’s current near-30% holding and the current market capitalisation
(£10m), it is quite possible that Alchemy will become the majority shareholder.
We note that, in the 22 October announcement of a strategic investment by Alchemy
in Countrywide, i) there was a capital raise of £90m, well above Countrywide’s (CWD)
market capitalisation at the time, ii) Alchemy’s stake potentially could rise to between
50.1% and 67.7%, iii) the equity raise included an open offer for existing
shareholders, iv) there was a tender offer, and v) the listing was taken from a
premium to standard listing. The issue price was 135p, against a closing price on 21
October of 184p. Clearly, any equity raise for NSF will be company-specific, but we
consider the CWD deal an interesting precedent.

Fastfood - you are probably right that my assumptions are a tad optimistic on revenue.
But I still think the Hardman note from November is over-negative. It's determined to make a case for a large placing (on which Hardman would of course hope to make substantial fees). It's also trying to make amends for its over-optimistic notes from earlier in 2020. Wasn't one called 'Sunshine after rain'?
In H1 2020 (Jan-June) revenue breakdown in the 3 divisions of NSF was:
EL - 46.91m
GL -17.03m
HC - 27.27m
In H2 we might see a 5% rise in EL and HC, and maybe 25% fall in GL? (no new loans, but existing book still performing)
That would give a revenue figure c£90m for H2.
We are in danger of handing over this perfectly viable and protentially very profitable business to Alchemy for a song. Probably 5p a share.