Non-bank prepares to float, targets $1.4bn

Personal loan provider Latitude Financial Services has lodged a prospectus with the Australian Securities and Investments Commission (ASIC) ahead of its initial public offering (IPO), with the aim of raising up to $1.4 billion.

The offer involves the sale of approximately 622.4 million shares on the Australian Stock Exchange (ASX) at $2 to $2.25 per share, which represents an aggregate 35 per cent stake in the company.

The majority stake will be divided between Varde Partners (20.6 per cent), KKR (20.5 per cent), Deutsche Bank (12.9 per cent) and a collection of other minority investors (11 per cent).

Upon completion, the offer is expected to raise between $1.2 billion to $1.4 billion, made up of:  

• primary shares worth approximately $1.05 billion to $1.06 billion
• secondary shares worth approximately $186.6 million to $335.4 million

Once finalised, Latitude’s shareholdings will total just under 1.8 million.

According to the non-bank, the purpose of the offer is to:

• provide Latitude with access to the public equity capital markets, which will allow it to reduce leverage, pursue further growth opportunities and improve its financial flexibility;
• allow the existing investors to realise a portion of their investment in Latitude (including full repayment of shareholder loans); and
• provide a liquid market for its shares and an opportunity for others to invest in Latitude.

The offer is set to open for 10 days, from 4 October to 14 October, with the settlement date pencilled in for 22 October and completion of the restructure scheduled for 23 October.  

Latitude expects to commence trading on the ASX on Friday, 18 October.

The non-bank closed FY19 with a combined cash net loss after tax of $9 million, which it expects to grow to a combined cash net profit after tax of $75 million by the close of FY20 – helped by a rise in gross loan receivables from $7.9 billion to $8 billion over the same period.

Latitude chairman Michael Tilley told investors: “Latitude’s listing on the ASX will improve Latitude’s financial flexibility to execute on its growth strategy and provide an opportunity for others to invest in Latitude.”

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