Latitude Financial Group pulls IPO as investor appetite falls short

With the IPO of Latitude Financial Group called off last night, the question remains as to what is the future for what is arguably the country’s largest non-bank lender.

Fund managers had suggested Latitude should be priced at 10 times forecast net profit of $287.6m, but it is understood investor Kohlberg Kravis Roberts had been insistent on the company being sold for 11 times.

This was after calls were made by investment bankers at UBS over the weekend to fund managers to test market appetite, which was said to be at 10 times or below. As a result of that, the call was made to lower the price of shares to $1.78 each from $2, taking its market value to $3.2bn.

Latitude owners KKR, Varde Partners and Deutsche Bank were to own about 54 per cent of the company once listed, with the stake escrowed until the release of its annual results next year.

KKR and Varde both own 35 per cent and were to retain 20.5 per cent, while it is no surprise that Deutsche Bank, which owns 30 per cent, was selling down the most, retaining 12.9 per cent, following a string of losses in recent years globally.

It is no secret that Deutsche has been an eager seller and one scenario that may now unfold is that it sells to KKR or Varde.

DataRoom understands that Varde and potentially even KKR have offered to buy the stake from Deutsche in the past, but the price was thought to be opportunistic. Now one wonders if the groups will return to the negotiating table.

Latitude is made up of the assets of the former local GE Capital consumer business, which was acquired by a consortium in 2015 for $8.2bn.

The business offers consumer finance through services such as personal loans, credit cards, car loans and retail finance.