Online retailer Shop Direct, owner of Very.co.uk and Littlewoods.com, has secured £75m of equity to be paid by the end of November 2019 from parent company Shop Direct Holdings Limited (SDHL). The Group has confirmed a further investment of £75m “including both equity and debt financing options”i but says this capital is not immediately required.
The retailer states “The committed funding available to our parent shareholder enables SDHL and Shop Direct to address fully the Group’s funding needs from the increased final PPI provision; together with the alternative funding options being evaluated, this once again demonstrates investor support for our proven operating model” and, insists the Group, “has no near term liquidity requirements”.i
The Shop Direct Group put aside £241m for PPI redress provision (including administrative costs) in the 12 months to June 2019. There was a significant increase in Claims submitted to the retailer in August, jumping to over 276,000 from an average monthly amount of 40,000ii, leading to the urgent need for further funds.
The majority of large financial firms were forced to significantly increase the funds in their PPI pay-out pots by millions of pounds after underestimating the increase in Complaints leading up to the PPI deadline of 29 August 2019. Lenders have said the jump in Complaints in the months to the deadline was unprecedented, leading to the need to increase the amount of money available to deal with Claims and also causing long delays in the time in takes to process customers’ Complaints.iii