RE: Up the Ante5 Mar 2020 19:17
Game theory dictates that in a market of rational players, parties will seek to make decisions that maximise their own position. Given JB owns 60% of the business, why would he come out with a comment that hacks 35% off the price....that is the question (assuming, as I do, that he is a rationale player here). He even alluded to there being tremendous value in the event the book is wound up.
Secondly, the provisions that Amigo have are covering projected future costs of losses on loans and regulatory compensation, so all the 'bad' is in theory priced into the business, unless future deterioration occurs that sees those assumptions revised.
The £100m loan book that was advanced on a pilot seems to be where a lot of problems in terms of complaints stemmed from, but that accounts for only 1/8 of the total loan book. Furthermore Ireland loans are providing some important growth potential.
On a savage day for the markets this has been hammered, but I take some comfort in previous RNS that stated there were several interested parties sniffing around this. Would the FCA have authorised a float of a business that it intended to close down - I very much doubt it. The news we have had is that there were improvements required to the communication of terms to guarantors, but nothing on the model being phased out or banned.
Some serious games being played here. Anyone that is trying to hold this through to the end is likely having a rather stressful journey and its disappointing for private investors. Have some faith and it could yield huge returns though.
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