Prospa soars in ASX debut

Online lender Prospa has started life on the ASX with a bang, with its shares surging almost 20pc.

Joint Prospa CEOs Greg Moshal and Beau Bertoli. Renee Nowytarger/The Australian

Online business lender Prospa has started life on the ASX with a bang as its shares surged more than 19 per cent in early trading.

After the stock (PGL) started trading at midday AEST, it was 19 per cent higher at $4.51 at 12.15pm (AEST). That is 72 cents higher than its initial public offering debut price of $3.78.

The stock rallied as high as $4.55 in early trade.

Prospa — which is led by joint chief executives Greg Moshal and Beau Bertoli — is the biggest Australian-based IPO so far in 2019 and the largest since the Qualitas Real Estate Income Fund’s float in November, according to data provider Refinitiv. When offshore based companies are included, Refinitiv ranks US-domiciled Life360’s IPO as the biggest in 2019.

Congratulations Prospa on being our 101st listing this financial year! Your listing adds more strength and depth to the ASX tech sector, with now over 90 tech IPOs and over $4bn raised since 2013 with more than 200 listings in total. https://t.co/bTVqxR0Nvt #ListASX #ipowithasx pic.twitter.com/huWCUyagaT

— ASX (@ASX) June 11, 2019

Prospa’s market listing comes after the fintech lender had to abandon last year’s planned IPO minutes before the stock was due to start trading, to address regulatory concerns.

The IPO funds are being used for investment in initiatives including technology and product development and pursuing expansion plans. They will also support working capital, repay debt and allow some existing shareholders to sell down all or part of their investment.

Prospa focuses on lending to small businesses in amounts of $5,000 to $300,000, and doesn’t require property or other security for loans of up to $100,000. The company has, however, come under fire for the high rates of interest it often charges.

It also offers a line of credit to small business and its total loan book sits at more than $300 million.

Certain existing shareholders were allocated about 6.6 million shares in Prospa’s institutional bookbuild, including Entree Capital and industry funds giant AustralianSuper.

Propsa is also backed by venture capital firms AirTree Ventures and Square Peg Capital.

The float is being view as a litmus test for venture capital exits on the local bourse.

Prospa raised almost $110m at $3.78, which gave the company a market capitalisation of $609.9m.

The company’s prospectus forecasts pro-forma financial year 2019 net loss of $1.5m or a loss of $16.9m on a statutory basis. For calendar 2019 a $2.6m profit on total revenue of $156.3m is expected.

Macquarie Capital and UBS managed the IPO.