Latitude pumps up IPO to $200m

Latitude chief executive Ahmed Fahour is set to hold 0.3 per cent of the listed company. Picture: Stuart McEvoy for The Australian.

Latitude Financial has increased the size of its initial public offering to $200m on the back of strong demand from retail investors.

Earlier, the non-bank lender was planning to raise $150m, $30m of which was to come from retail investors.

However, the move to lift the offer size comes after retail demand for the stock market listing proved overwhelming last week.

The IPO is now set to close on Monday.

Working on the retail component to the IPO has been Ord Minnet, Bell Potter, Escala and CBA.

The non-bank lender, which generates much of its revenue through its personal finance relationships with retailers such as Harvey Norman, Apple, JB Hi-Fi and Amart, is set to list as a $2.6bn company on April 20.

This is after locking in support from four Australian institutional investors at the $2.60 a share IPO price and Japan’s Shinsei Bank, which is buying just under 10 per cent of the business for $300m.

The institutional investors provided about $120m to cornerstone the offer.

The $200m raise excludes the sale to the Japanese.

The plan is to sell only a minimal amount of stock and for the private equity owners to offload more shares over time once the company’s valuation increases on the market.

Latitude is owned by Deutsche Bank, Varde Partners and Kohlberg Kravis Roberts, which will emerge with about 65 per cent of the company once it is listed.

According to the prospectus, chief executive Ahmed Fahour will hold 0.3 per cent, but he has an option to buy 16.5m shares in March 2023 in three 5.5m tranches at $3.12 for the first tranche, $3.25 for the second and $3.50 for the third.

According to the prospectus, Latitude generated $224m of cash net profit for the 2020 financial year and $274m in 2019.

The offer price equates to 11.6 times its cash net profit and Latitude will have a 6.1 per cent dividend yield.