SPECIALIST lender Provident Financial has added an extra string to its bow through buying the UK's leading non-standard vehicle finance provider Moneybarn.

The Bradford-based group says the £120 million cash acquisition - to be funded through placing new Provident ordinary shares with institutional investors - will add another product offering to its target customer base and complement organic growth opportunities.

Moneybarn is part of the Duncton Group Limited and was founded in 1992. It provides car finance to non-standard UK customers , operating mainly through brokers with additional distribution through independent car dealers and from its website.

The business offers secured car loans, mainly through conditional sale agreements and with the car typically used for necessities such as travelling to work rather than for luxury or discretionary purposes.

Funding constraints have limited Moneybarn's operations recently and Provident said this left scope for growing the business.

A statement said: "The board believes that the business is highly scalable, given the strength of broker relationships and market leading credit decisioning, combined with the strength of the group’s balance sheet. Potential opportunities for synergies with the group’s existing businesses, including enhancements to underwriting and collections capabilities, the development of a business-to-consumer proposition and leveraging the Vanquis Bank customer base, will be evaluated post-acquisition."

The deal is expected to immediately boost Provident's underlying earnings. Moneybarn is a high return on capital business and, there will be no change to the group’s financial model or dividend policy.

Moneybarn's net net receivables in June were £133.1 million and for the year ended December 31 2013,it reported audited profit before tax of £5.5 million, gross assets of £151.6 million and net receivables of £128.5 million .

Provident said Moneybarn has a well regarded management team, led by Peter Minter, with significant experience and expertise, which will be retained and will report directly to Peter Crook, Provident group chief executive.

Moneybarn will retain its own brand name and continue to operate from its existing base in Petersfield, Hampshire.

Peter Crook, said: “I am delighted that Provident Financial is able to announce the acquisition of Moneybarn, which is the market leader in the non-standard car finance market.

"The acquisition provides an exciting opportunity to create a third leg of earnings that complements the organic growth opportunities available to the group. I look forward to working with Peter Minter and his team to realise the significant growth opportunity in this market.”