Cuscal locks in $223m of commitments for IPO

Lendlease director Elizabeth Proust will be chair of payments infrastructure company Cuscal when it is listed. Picture: Chris Pavlich

Cuscal is telling the market that demand from institutional investors is greater than the shares on offer for its initial public offering.

Cuscal has allocated about $60m of the broker firm offer, which is about 18 per cent of the deal size.

“⁠Together with cornerstone commitments, a total of about $223m has now been allocated, representing about 66 per cent of the deal size,” it said.

The book build is scheduled to close at 5pm on November 21.

The payments infrastructure company is raising $336.8m at $2.50 a share.

It will list with a market value of $479m on November 25.

Last week, the company told the market that it had cornerstone commitments of about $170m representing about 51 per cent of the offering.

Cuscal is being priced at 13 times net profit when the overall market is trading at 19 times – although it will have a lower level of return on equity than other stocks.

The company manages the payment rails between merchants and customers.

Chaired by Elizabeth Proust, the debt-free Cuscal, which provides payment services to banks, is being pitched as a group with a strong track record of earnings growth and something of an annuity-style investment.

Its owners include Bendigo and Adelaide Bank, Mastercard and other mutual banks.

Bell Potter, Ord Minnett and MST Financial are working as advisers on the transaction with Bank of America.

Now making $30m of annual earnings, it has grown over time and there’s an opportunity to grow market share while keeping costs fixed, providing the possibility for higher margins.