LONDON (Reuters) - Major UK investor Aberdeen Standard Investments (SLA.L) is behind a lawsuit that Provident Financial says it has received over alleged delays in disclosing an investigation into its credit card unit, a source familiar with the matter said.
Provident Financial (PFG.L), a sub-prime lender, disclosed the lawsuit last month, without saying who was behind it. The company said it believed the suit was “unmeritorious,” but that defeat could have a “material adverse effect” on its business.
Provident had almost 2 billion pounds ($2.8 billion) wiped off its market value last August, after its second profit warning in quick succession prompted the departure of CEO Peter Crook and the suspension of its dividend.
On the same day, Provident also said it had halted sales of a repayment plan offered by its credit card unit Vanquis Bank, pending an investigation by the Financial Conduct Authority.
Provident received a letter on Jan 26, 2018, seeking compensation from an unidentified institutional investor, it said in its rights prospectus last month.
“The institutional investor asserts that the company is liable to compensate it and its subsidiary investment funds for losses suffered as a result of the fact that certain matters disclosed in the 22 August announcement were not publicly announced earlier or disclosed to them by the company in investor meetings,” Provident said in the prospectus.
It added that it “currently believes the claims by the institutional investor are unmeritorious and considers the prospects of the claims being upheld to be limited”.
However, if the claims are upheld, they could have a “material adverse effect” on its business, it added.
A Provident spokeswoman declined to comment on Monday.
Aberdeen Standard Investments is the fund unit of Standard Life Aberdeen (SLA.L), formed from the merger last year of two asset managers.
One - Aberdeen Asset Management - is the seventh largest investor in Provident Financial with a 3.7 percent stake, according to Thomson Reuters Eikon. The other - Standard Life Investments - is the ninth largest, with a 3.1 percent stake.
The Times named the company behind the lawsuit earlier on Monday.
“The increased prominence ... means the potential costs/hit for (Provident Financial) will now likely feature more heavily in investors’ minds,” Goodbody Financials analyst John Cronin said in a note.
Provident’s shares were down 0.7 percent at 673.6 pence at 1350 GMT.
Reporting by Carolyn Cohn and Noor Zainab Hussain; Editing by Silvia Aloisi and Mark Potter