Demand for the float of Cuscal will no doubt be a positive for those hoping the IPO market will reopen, but much of it will depend on how it trades once listed.
Cornerstone investors tipped in half of the $336.8m that it was planning to raise as part of the initial public offering.
The payments infrastructure company told the market on Friday that it had excess demand for the shares on offer as part of the IPO, indicating that the deal, which was not underwritten, will be done on November 25 as planned after the bookbuild closes four days earlier.
The appeal to investors has been that the price is seen as cheap at 13 times its net profit, when the overall market is trading at 19 times.
That’s also the case with Victoria civil construction and equipment hire company Symal.
It is raising $136m for an IPO with a $437m market value when it lists on November 21, selling to investors at four times its earnings – a low valuation despite it being a tough operating sector.
Adding support for further floats is the fact that the Australian market has rallied, taking its lead from the US, on the back of the Republican Party win in the US election last week.
Tasmea, which listed this year, and Guzman y Gomez are both trading higher than their IPO price.
Cuscal is the biggest float of the year. Next may be the HMC Capital’s DigiCo Infrastructure REIT but it may be pushed into next year.
As reported by DataRoom on Friday, Cuscal, chaired by Elizabeth Proust, has lodged its IPO prospectus and has launched its management roadshow.
The IPO was priced two weeks ago at $2.50 per share, which gives it a $479m market value.
The price also equates to 7.7 times earnings before interest, tax, depreciation and amortisation for the 2025 financial year and a dividend yield of 3.7 per cent.
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.
The business provides security, data analysis and payment infrastructure services, offering business-to-business services for institutional clients such as corporates, banks, credit unions, fintech companies and superannuation funds.
These include credit cards, mobile banking and payments apps, BPAY, ATM services, data management and fraud services.
It is building capabilities in the data services industry and was the first company to launch connectivity solution in Australia for Apple Pay, Google Pay and Samsung Pay.
Beyond the major banks it is the largest centralised provider of payments infrastructure in the local payments industry.
Cuscal planned to list last year but pulled the pin in November in tough market conditions.
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.
Crown owner Blackstone fancied to snap up Star
There’s talk that the New York-based private equity firm is once again having some serious conversations in the background about taking over Star Entertainment.
NAB weighs return to Scottish roots
The $1bn-plus sale process for the non-bank lender Scottish Pacific is yet to start in earnest, but there’s one party that has already been at least kicking the tyres.