Short term loan provider looking into stock flotation in US

One of the biggest providers of short term loans in the UK, Wonga, could soon be going public, with rumours of a US stock exchange flotation that could exceed £1 billion in value.

Errol Damelin, the co-founder of the controversial payday advance lender, has begun the hunt for two financial lending institutions to spearhead a potential float next year on either the Nasdaq or the New York Stock Exchange, with JP Morgan Cazeno, Goldman Sachs, and Barclays Capital all vying for one of the lucrative positions.  Industry experts believe that Wonga could be valued as much as £1.46 billion if it came down to it.

The payday loan provider, which was founded in 2007, posted profits before tax of £16.6 million in 2010 after raking in sales of £73.8 million.  Oak Investment Partners, a US venture capitalist, led a round of funding that generated an additional £73 million for the company by February of last year.

However, Wonga has been criticised quite harshly, with accusations flying that the lender has been engaging in activity that amounted to targeting the financially vulnerable and in charging interest rates that have been eye-wateringly high.  Chuka Umunna, the shadow business secretary, condemned Wonga’s planned foray into providing lending to small businesses recently, while the payday lender’s debt collection practices have been singled out by the Office of Fair Trading, which threatened the lender with fines if it continued to engage in its ‘aggressive and misleading’ tactics when it came to collecting debts.

Wonga denied any wrongdoing, claiming that any strongly-worded remarks it had for borrowers had only been directed to those who were legitimately suspected of defrauding the lender.

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