KKR, partners lower IPO price of Australian non-bank lender Latitude

FILE PHOTO: Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid/File Photo

U.S. private equity firm KKR & Co and its partners have lowered the IPO price of their Australian non-bank lender, Latitude Financial, by at least 11% ahead of its expected listing on Friday, two sources told Reuters.

The owners will now seek to raise about A$1 billion ($678.6 million) in exchange for up to 33% of the company, down from the previously planned 35%, the sources with direct knowledge of the situation said, making it the largest IPO in Australia since July 2018, according to Refinitiv data.

The new price is about A$1.78 per share, giving the company a market valuation of about A$3.1 billion, 20.9% lower than the previous top range, the sources said, asking not to be identified because they were not allowed to talk to the media.

A spokesman for Latitude declined to comment.

It is the second attempt to list Latitude by KKR, Deutsche Bank and Varde Partners. The trio had filed a prospectus with the regulator last month valuing the finance company at between A$2 and A$2.25 per share.

The pricing haircut was decided on the weekend, the sources said, ahead of a two-day bookbuild process ending on Wednesday.

Although some investors had committed to buy shares at the lower end of the range, KKR and its partners believed a lower price would achieve better support. Shares in the company would also have a better chance of trading higher on Oct. 18, when they start trading under the code LFS, the sources added.

The firm, which offers easy-access loans and credit cards with minimal paperwork, expects to report 3% growth in cash earnings of about A$288 million for the 12 months ending June 2020, according to its prospectus.

KKR, Deutsche Bank and Varde Partners founded the company in 2015 when they bought GE Capital’s Australian and New Zealand consumer lending arm for A$8.2 billion.

Today, it has about A$8 billion in gross loans to 2 million customers, primarily credit cards, personal loans and auto loans, and it plans to grow its digital and installment payment business, the prospectus says.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.