International Personal Finance shares jump 7% as BasePoint submits revised final offer

BasePoint Capital raised its recommended offer for International Personal Finance to 250p per share (235p cash plus a 15p special dividend), a c.40% premium, sending the stock up ~7% and trading marginally above the offer price. The transaction, supported by irrevocable undertakings from Janus Henderson (~4.08%) and a letter of intent from JO Hambro (~3.04%), requires court and shareholder approval at meetings on 11 March with completion expected by end-Q2 2026. IPF reported pre-exceptional profit before tax of £88.6m (vs £85.2m), customer growth +4.7% to 1.7m, closing net receivables +13.9% and an improved impairment rate of 9.0% (from 9.6%); a proposed final dividend of 9p (FY total 12.8p) would be subsumed into the deal if it completes.

Analysis

Market structure: The immediate winners are BasePoint (private equity arbitrage on 235p cash + 15p special dividend) and shareholders who accept 250p with certainty; marginal holders and arbitrageurs who were pricing deal-break risk lose optionality as free float will shrink if the scheme completes (completion expected by end-Q2 2026). The removal of ~100% of public free float (if fully accepted) tightens supply of UK-listed consumer-finance exposure and compresses public comparables, increasing takeover multiples for remaining listed peers.

Risk assessment: Key tail risks are (1) competing bidder (>250p) which could lift price quickly, (2) BasePoint financing or regulatory failure in Poland/Mexico/ Romania leading to deal collapse and a >20-40% downside, and (3) macro-driven impairment reversal if unemployment spikes. Short-term windows: immediate (days) around shareholder vote 11-Mar, short-term (weeks) through Q2 financing/clearances, long-term (quarters) execution risk post-privatization.

Trade implications: Avoid initiating large uncaptured long positions in LSE:IPF above 250p; for event-driven books, consider small-directional arb: short IPF size 1-2% NAV or buy 3-month puts (strike 240–245p) ahead of 11-Mar and hold to Q2 close. Pair trade: long a diversified EM consumer-finance exposure (or UK peer PFG.L size 1-3% NAV) and short IPF to isolate takeover/financing risk; if implied volatility stays low, prefer buying puts to naked short.

Contrarian angles: The market pricing slightly above 250p implies unrealistic probability of a higher rival or break; consensus underestimates BasePoint financing/regulatory risk. Historical parallels (small UK consumer finance takeovers) show ~15–35% crash-to-reopen if deals fail; set buy thresholds (accumulate IPF at <200p for a 12–24 month turnaround) and consider asymmetric option plays if implied vol spikes post-vote.

Key Decisions for Investors

• Do not buy LSE:IPF above 250p for a passive position. For an event-driven short, establish a 1–2% NAV short of IPF now (or synthetic short via 3-month put options strike 240–245p) with a hard stop at 255p and a target exit at 250p (capture deal spread) or 235p if tender mechanics create execution opportunities.
• If running a relative-value book, go long Provident Financial (LSE:PFG) or a diversified EM consumer finance ETF (size 1–3% NAV) and short LSE:IPF (size offset) to isolate takeover/financing risk; rebalance after the 11-Mar shareholder vote or upon public disclosure of BasePoint financing docs.
• Buy downside protection: purchase 3-month IPF puts (strike 240–245p) sized to cover 50–100% of any existing IPF exposure through the 11-Mar vote and expected Q2 completion; if premiums rise >1.5% of position value, switch to a 3-month put spread to cap cost.
• Set contingency buy level: if IPF trades ≤200p post any deal failure/financing news, accumulate up to 3–5% NAV with 12–24 month horizon, using staggered buys at 200p, 180p and 160p and targeting total return >30% conditional on operational recovery.