Momentum may be gathering behind the scenes for a listing of Kohlberg Kravis Roberts’ Pepper Australia business, but it seems the New York-based private equity firm could also have plans afoot for its other Australian-based lender – Latitude Financial.
DataRoom understands that KKR has hired Jefferies Australia to assess options for its interest in Latitude.
Some have indicated that soft soundings had recently occurred by parties on behalf of KKR to test the appetite for a listing of Latitude after two earlier attempts.
This is on the back of a strong performance by its competitor Liberty Financial when it headed to the boards in December.
However, others close to the company say a listing is not currently on the agenda for the country’s largest non-bank lender.
Latitude’s owners, which includes KKR, Varde Partners and Deutsche Bank made advanced plans to list on the Australian Securities Exchange during 2019, but shelved the float at the final hour when prospective investors were unprepared to meet its $3.6bn price expectations.
Latitude had hoped to achieve a price of 11 times its annual net profit, which at the time was $287.6m.
Owners KKR, Varde Partners and Deutsche Bank were to own about 54 per cent of the company once listed.
KKR and Varde both own 35 per cent and were to retain 20.5 per cent, while Deutsche Bank, which owns 30 per cent, was to retain 12.9 per cent.
The Ahmed Fahour-headed Latitude is made up of the assets of the former local GE Capital consumer business, which was acquired by a consortium in 2015 for a price of $8.2bn including debt.
The business offers consumer finance through services such as personal loans, credit cards, car loans and retail finance.
Meanwhile, expectations are mounting that KKR’s other non-bank lender, Pepper Australia, is heading to the market this year.
Liberty shares closed up 17 per cent on its first day of trade in December, and the thinking has always been that its initial public offering would be closely followed by Pepper Australia if it proved to be successful.
The secret to Liberty’s success is that it came to the market at a time when investors were hungry for high yielding investments amid a low interest rate environment and kept its raising tight at just $321m, with its market value at $1.8bn.
Liberty’s market value is now $2.36bn.
Investment bank Macquarie Capital is believed to already be lined up for a role working on a potential float of Pepper Australia, say sources.
When Pepper was planning to list in 2019, Macquarie was working on the IPO with investment bank Citi, while Credit Suisse lost its mandate after it was hired by Liberty for its IPO.
In 2019, Pepper Australia was expected to be worth about $700m.
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