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Non-bank in crosshairs of Japanese giant

A Japanese bank backed by a major conglomerate has upped its investment in an Australian non-bank lender with extensive relationships in the third-party channel.

ASX-listed non-bank lender Latitude Financial could be a prime acquisition target of Japanese lender Shinsei. A trading update released on Thursday (15 September) informed the market that Tokyo-based Shinsei Bank had increased its holding in Latitude Financial from 11.08 per cent to 12.85 per cent.

Shinsei acquired 10 per cent of Latitude last year, prior to its ASX listing. The institutional investment is understood to have boosted Latitude’s valuation prior to floating on 20 April 2021. The IPO was underwritten by BofA Securities, Credit Suisse and Jefferies. Latitude has a market capitalisation of $1.4 billion.

Shinsei’s intentions for the non-bank lender, formerly GE Money and with a network of more than 5,000 accredited brokers, remain unclear. But fund managers are speculating that a potential takeover could be on the horizon, particularly given the aggressive corporate dealmaking of Shinsei Bank’s new parent company, SBI Holdings.

SBI is a Japanese online financial services conglomerate that has been vocal about its plans to take Shinsei Bank private.

In December, SBI chief executive Yoshitaka Kitao said it is exploring the possibility of taking Shinsei Bank private to return $3 billion in public funds.

“A delisting would be a key milestone for Shinsei, which has been unable to repay the public money its predecessor bank received two decades ago as its shares have long underperformed over years of low interest rates in Japan,” Reuters reported.

Last month Latitude Financial reported a statutory NPAT of $30.6 million, down 57 per cent on 2H21 and down 66 per cent on 1H21.

Latitude CEO Ahmed Fahour announced his resignation after posting this result. The former Australia Post CEO would have led Latitude for nearly four years when he steps down in August 2023.

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