High-cost lender Evlo, formerly Everyday Loans, has hired advisers at Alantra to run a sale process codenamed Project Oak, according to City AM. The sale could value the lender-owned business at more than £200m.
Evlo lends to borrowers with thin credit files or sub-prime ratings through a network of branches across the UK. Its loans carry interest rates of up to 252%, and its average customer is reported to earn around £31,000 a year.
The business went through a restructuring before reaching this point. Everyday Loans used to belong to London-listed Non-Standard Finance. The parent company was then hit by thousands of claims from borrowers who alleged irresponsible lending.
How the cap table changed
Everyday Loans was moved out of that group through a scheme of arrangement, which set aside about £14m to compensate customers. The lending business was transferred into a new holding company owned by its lenders, and it rebranded as Evlo last year.
This means any sale would be an exit for creditors who became shareholders, not for a traditional private equity sponsor or founders. The identity of those lenders and the size of their stakes have not been disclosed.
The numbers
Evlo reported a profit of about £14.2m last year, after impairment losses on its loan book of £42.2m. On those figures, a £200m price tag would imply a multiple of roughly 14 times last year's profit.
Evlo and Alantra declined to comment.
A shrunken market
A sale would test whether investors are coming back to the UK's high-cost credit sector after years of decline. Figures from the Financial Conduct Authority show that about 250 high-cost credit firms left the market between 2019 and 2024, and lending capacity fell by almost £3bn.
Some of the biggest names have collapsed in that time. Amigo Loans and Wonga.com both failed after waves of compensation claims and tighter supervision. Everyday Loans itself was censured by the Advertising Standards Authority in 2022 over an advert for a consolidation loan priced at 99%.
Buyers now appear to see an opening. Consultancy LEK estimates the gap in UK consumer lending at around £2bn, created by the lenders that have left the market.
"This is a good business that has had some bumps and scrapes," chief executive Jono Gillespie told the Financial Times last year.
What's next
Alantra will now try to attract bidders. Specialist credit funds and consumer-finance buyers are the most likely candidates, given the regulatory complexity of the business. Any buyer will also need approval from the FCA for a change in control.
A deal at or above £200m would be one of the clearest signs yet of renewed investor appetite for UK sub-prime lending since the Amigo and Wonga collapses.
Original source: City AM — https://www.cityam.com/high-cost-loans-firm-evlo-eyes-200m-sale-in-sign-of-subprime-comeback/
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