Latitude Financial set to list with $3.6bn market value

Latitude Financial boss Ahmed Fahour. Picture: Stuart McEvoy

Latitude Financial is shaping up to list with a $3.6bn market value, securing about a third of its support from retail investors, as the international leg of its management roadshow for its IPO ramps up ahead of the bookbuild next week.

It is understood that, at the weekend, indications of demand from institutions and retail brokers for shares in the non-bank lender had been received for about 70 per cent of the offer size at the bottom of the range in its prospectus.

The prospectus has the company valued at between $3.556bn and $4bn, equating to between 7.8 times and 8.8 times Latitude’s pro forma adjusted earnings before interest, tax, depreciation and amortisation on an enterprise value basis.

Should Latitude price at the bottom of the range, which is now shaping up to be the case, it will see its shares sell at $2 each.

Run by Ahmed Fahour, the business offers consumer finance through services such as personal loans, credit cards, car loans, personal insurance and interest-free retail finance and is one week into its institutional investor roadshow, with meetings held throughout Australia. But this week will be the big test, as management heads to London, New York and Hong Kong after the international roadshow began on Friday in Auckland.

Retail bids for the business are expected around Wednesday and so far the expectation is that about one third of support for the float will come from retail investors, who remain hungry for high-yielding investments amid a low interest rate environment.

The pricing is to be finalised during the bookbuild on October 15 and 16.

Various parties in the market are questioning where demand will come from for Latitude, both on the retail investor and institutional investor side.

But the understanding is the company had confidence there was enough demand to see the business list as worth $4bn before it fired the starting gun on its listing plans. Broking firm bids are due on Tuesday.

The success of Latitude’s listing is seen as critical for the market this year because it is the largest deal of 2019, with between $1.24bn and $1.4bn worth of funds to be raised. Some other floats are said to be riding on the float going well after few listings have come to market this year.

A major test will be its performance once it makes its debut on October 23. Weaker markets have been blamed for the likely move to price the company conservatively and such a decision will offer credibility once it starts trading.

A float of rival Liberty Financial and also the KKR and TPG Capital-backed company Property Guru are expected to depend on Latitude’s success.