Provident Financial’s battle against hostile suitor Non-Standard Finance (NSF) was boosted on Tuesday after top shareholder Schroders said it would reject the NSF offer.
The £420 billion fund house, which owns nearly 15% of Provident, made a rare public intervention saying the £1.1 billion all-share bid risked “destabilising” Provident’s recovery.
In a letter to Provident’s chairman Patrick Snowball, Schroders said that the rights of minority investors were not being protected under the terms of the deal.
Provident’s top two shareholders, Woodford Investment Management and Invesco, have backed the all-share takeover but they also own major stakes in NSF, giving them an outsized influence on the deal.
Schroders said the majority investors who own both shares should not be “seeking to impose the challenges” of NSF on minority Provident shareholders.
It also said a bid deadline which falls prior to the end of a competition probe forced shareholders to “underwrite any costs of redress blindly”.
Fund manager Kevin Murphy, who signed the letter alongside global head of stewardship Jessica Ground, said: “As a minority shareholder in Provident Financial we want our rights to be respected and we don’t want to be pressured into something that may not be in our best interests.
“If you are not also a shareholder in NSF your risk and rewards are different.”
Shareholders have until 15 May to decide whether to accept the deal.
