PE-backed Latitude targets up to $946m in Australia IPO

It would be the largest offering by a private equity-owned company on the Australian Stock Exchange since Healthscope raised A$2.4 billion in 2014. Local retail investor appetite for financial sponsor-backed IPOs has been muted in recent years. Between 2014 and 2016, A$10.2 billion was raised through 41 offerings. There have been 14 since 2017, including three this year, with proceeds reaching A$262 million. Most of the companies that listed were technology start-ups.

Latitude – which was GE Capital’s Australia and New Zealand consumer lending unit until sold to the private equity consortium for A$8.2 billion in 2015 – will sell approximately 622.4 million shares at A$2.00-2.25 apiece, according to a statement. If the shares price at the top end of the range, the business will have a market capitalization of A$4 billion.

The offering will comprise up to 149.1 million held by existing investors. KKR and Värde each own 35% of Latitude, while Deutsche has 30%. On completion of the offering, their stakes will fall to 20.5%, 20.6%, and 12.9%, respectively. They have agreed to maintain their holdings until Latitude releases its financial results for the six months ended June 2020. Most of the proceeds from the sale of primary shares will be used to pay off A$909 million in shareholder loans extended to the company by its investors.

Latitude is a digital payment, installments and lending platform. It offers installment payment products LatitudePay and Genopay, issues credit cards, and brokers personal and automobile loans. These are distributed directly to consumers and through a network of more than 1,950 merchant partners that operate 9,000 online and physical outlets in Australia and New Zealand. The company makes money from interest payments, insurance premiums, and other service fees.

In addition to establishing Latitude as a standalone business, the private equity investors claim to have invested heavily in the brand, upgraded technology infrastructure, and created a funding platform through which the company sources revolving warehouse facilities and issues asset-backed securities.

As of June, Latitude has 2.6 million customer accounts, including 1.84 million active accounts, and gross loan receivables of A$7.7 billion. Total operating income – of which nearly 90% is net interest income – came to $889.5 million in 2018 financial year, up from $845.8 million in 2017. Over the same period, net profit rose from A$33.6 million to A$57.5 million.

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• Topics
• Australasia
• IPO
• Financials
• KKR
• Varde Partners
• Deutsche Bank
• Australia
• Financial Services