Latitude Financial edges closer to IPO, brings in Bank of America and Credit Suisse

Latitude Financial chief executive Ahmed Fahour. Picture: Aaron Francis

It appears Latitude Financial is moving further towards an initial public offering, with Bank of America and Credit Suisse poised to be formally mandated on a deal along with Jefferies Australia.

DataRoom revealed in January that a float of Latitude was on the agenda, with Jefferies Australia aiding shareholder Kohlberg Kravis Roberts on a potential transaction.

Soft soundings had recently occurred 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.

The understanding is a float is not due to happen until after Easter and at this stage the focus is on only a compliance listing where the selldown involves about 25 per cent of the business.

The compliance listing plans were revealed by DataRoom in February.

Latitude’s owners, including 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.

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.

It comes as KKR also prepares to float Pepper Money.

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 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.

In 2019, the Australian based Pepper Money was expected to be worth about $700m.