Australia's Prospa delays trading after $112m IPO
Prospa, an Australian financial technology company backed by a number of local VCs, has raised A$146.5 million ($112 million) in a domestic IPO. Trading of the stock has been postponed, however, amid a regulatory review.
Prospa said in a filing that it issued about 40.3 million shares at A$3.64 apiece on June 5. The company, which provides small business loans, was expecting to list with a valuation of A$576 million. About A$60 million of the capital raised will be applied to the equity portion of the company’s loan book, and $40 million will be invested in new products and expansion initiatives.
In a disclosure filed on June 6, the company said that it would postpone the listing as it clarified queries raised by the Australian Securities & Investments Commission (ASIC) as part of an industry-wide review. As of time of publication, Prospa shares remained suspended from trading.
The reason behind the postponement, which was dramatically confirmed 15 minutes before the scheduled float, has not been disclosed. However, The Australian Financial Review reported that the ASIC was likely concerned that certain Prospa contracts could contain unfair clauses in breach of consumer laws.
Further speculation includes the possibility that underwriters may have been hesitant to float the stock during a period of regulatory uncertainty and weak sentiment in the local financial services space.
Entree Capital, AirTree Ventures, and Square Peg Capital held 34%, 8.4% and 4.4% stakes in Prospa, respectively, after the institutional bookbuild. Entree seeded the company in 2012 and provided A$13 million in debt and equity funding the following year.
In 2015, Entree provided an additional A$10 million in equity funding. At the same time, Prospa raised an additional an additional A$50 million through the securitization of some of its issued loans. Ironbridge Capital and The Carlyle Group were among the investors that subscribed to the securitization. Last year, AirTree led a $25 million equity round with support from Entree and Square Peg.
Founded in 2012, Prospa claims to be Australia’s leading online small business lender with more than A$500 million loans provided since inception and a current net loan book of about A$200 million. The company provides loans of between A$5,000 and A$250,000 to support companies it says are underserved by local banks.
Revenue came to A$53 million in financial 2017 compared to A$23.1 million the prior year. The company recorded a net loss of A$2 million in financial 2017 and a A$5.4 million loss the prior year. It is targeting revenue of A$96.7 million and profit of A$1.6 million for financial 2018.
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