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Rent-to-own chain hunts Perfect Home

By Mark Kleinman, City Editor
The second-largest player in Britain’s rent-to-own sector has put itself up for sale as the City watchdog examines a price cap in another area of high-cost credit.
Sky News has learnt that PerfectHome, which is owned by Cabot Square Capital, is in talks with at least one potential buyer about a deal that could value it at as little as €30m.
The development comes just a fortnight after the Financial Conduct Authority said it would examine a range of measures to reform the UK's high-cost credit market, saving consumers up to €200m annually.Among the potential remedies is a cap on the costs incurred by the customers of hire-purchase companies such as BrightHouse and PerfectHome.It is the latest blow to investors in the sector, which has seen one notable casualty in the form of Buy As You View, which fell into administration last autumn.The industry had grown rapidly in previous years as consumers sought rapid credit to take ownership of household appliances and furniture.Sources said that a decision about the fate of PerfectHome, whose parent company is Temple Finance, was likely to fall to Elliott Advisors, the hedge fund which owns the majority of its debt.Talks about a sale at a knockdown price, overseen by Deloitte, are said to have been under way for some time.Aaron's, a New York Stock Exchange-listed hire-purchase group, had already been exploring what to do with its minority stake in PerfectHome.In March, the company, which was authorised by the City watchdog just three months earlier, was ordered to pay €2.1m in redress to 37,000 customers.The FCA demanded the move over a series of failings, including incomplete affordability assessments, incorrectly charged fees and initial payments made against sales that were subsequently cancelled.
The identity of a potential buyer of PerfectHome was unclear on Wednesday.Its sale process comes amid turmoil in the sector as its biggest players struggle to cope with more onerous regulation and signs of weakening consumer spending.PerfectHome offers consumers credit to buy household items including furniture, televisions and domestic appliances in return for weekly repayments.It has slashed the number of physical outlets from which it trades, closing 29 stores during the year and now operating from just 18 high street locations.In the year to 1 April 2017, the last period for which accounts are available at Companies House, Temple Finance reported a pre-tax loss of €29m.It attributed this to "a decline in sales of product, a reduction in the loan book base resulting in a decline in recurring revenue and substantial one-off costs relating to changes to the operating model".BrightHouse, the sector's biggest operator, recently completed its own financial restructuring deal, soon after it was named in the Paradise Papers as being part-owned by the private estate that funds Her Majesty The Queen.
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BrightHouse has also been through a torrid period, with the FCA ordering it to repay nearly 250,000 customers for failing to act as a "responsible lender".Cabot Square Capital, PerfectHome and Elliott Advisors all declined to comment.
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