Chesswood Group, a speciality-finance provider, experienced a boost in its shares following the announcement of a strategic review that will explore various options for the company. These options include a potential sale or wind down of portfolios.
Share Price Increase: As a result of this news, the company’s shares saw a 4.7% increase in early trading, reaching C$8.29. This uptick in share price has helped to alleviate some of the previous 25% drop experienced over the past year.
External Financial Advisers: To aid in the review process, Chesswood has enlisted the services of external financial advisers. However, it is important to note that this review may not necessarily lead to significant changes within the company.
Analyst Mike Rizvanovic from Keefe, Bruyette & Woods expressed surprise at the announcement of the review, considering Chesswood’s progress in securing new funding partners. However, Rizvanovic believes that this review could potentially unlock value for shareholders. The analyst also highlighted the fact that the company’s current valuation is heavily discounted compared to the 10-year average, indicating that funding costs have been higher due to the prevailing high interest-rate environment. Additionally, elevated charge-offs in recent quarters have impacted the company’s trajectory.
Based in Toronto, Chesswood Group offers a range of financial services, including commercial equipment leases and loans, automotive loans, home-improvement financing, legal financing, and asset management. During this review process, the company has made the decision to suspend its dividend payments. Any decisions regarding future payouts will depend on the outcome of the review. The review is set to be completed by the end of March.