High cost lender Evlo has tapped bankers for a sale which could fetch the company a valuation of more than £200m, City AM can reveal, in signs of a revival of interest in the controversial subprime lending market.
Evlo, which calls itself ‘the friendly UK lender’ and offers loans at interest rates of up to 252 per cent, has hired advisers at Alantra to run a sale process dubbed ‘Project Oak’, sources told City AM.
The sale could signal a resurgence of investor interest in the sub-prime and high-cost loans market – formerly known as Everyday Loans – which has shrivelled in size since 2019 under scrutiny from regulators and a deluge of claims from borrowers over exploitative lending practices.
Some 250 high-cost credit firms exited the market between 2019 and 2024, while overall lending capacity was down by almost £3bn, according to the Financial Conduct Authority. Sources said investors were now eyeing an opportunity to capitalise on a consumer lending gap, estimated to be around £2bn by consulting group LEK.
Evlo, which operates a network of branches around the country, typically lends to borrowers with minimal credit history or sub-prime credit ratings. Its average customer has an income of around £31,000, according to reports. It reported impairment losses on its loans of £42.2m last year and made a profit of roughly £14.2m.
The company was owned by London-listed Non-Standard Finance before the parent company was hit by thousands of claims from borrowers over allegedly exploitative lending practices.
As part of a scheme of arrangement, in which it set aside some £14m to pay out to customers, Everyday Loans was transferred into a new holding company owned by its lenders. It rebranded as Evlo last year.
Since 2019, a number of the high-cost loan market’s biggest players including Amigo Loans and Wonga.com have gone under after huge compensation claims from borrowers and tighter scrutiny from the Financial Conduct Authority.
Everyday Loans was also reprimanded by the Advertising Standards Authority in 2022 for an advert which suggested that customers could use its loans to pay off their debts with a loan at an interest rate of 99 per cent.
At the time, Everyday Loans argued it was advertising a “consolidation loan” that could be used to pay off pre-existing debts, which it said was a common financial product offered by numerous regulated lenders.
“This is a good business that has had some bumps and scrapes,” Evlo boss Jono Gillespie told the Financial Times last year.
Evlo and Alantra declined to comment.