Latitude to release prospectus for $1.2bn IPO

Latitude Financial CEO Ahmed Fahour. Picture: Stuart McEvoy.

Owners of Latitude Financial are planning to raise between $1.2bn and $1.4bn through an initial public offering of the non-bank lender, as the market braces itself for the release of its prospectus on Thursday.

It is understood that the company’s market value will be close to $4bn, equating to at least 12 times the company’s net profit, as earlier flagged by The Australian.

Investors will have the opportunity to secure a dividend yield of between 4.3 per cent and 4.7 per cent.

Working on the float are Macquarie Capital, Goldman Sachs and UBS, while co-lead managers include Ord Minnett, Crestone, Wilsons and Morgans.

As previously flagged by DataRoom, it is understood that the company has priced the deal at close to $4bn after securing demand to list the business at that value.

The business is expected to be listed in late October or in November, with the prospectus out on Thursday.

Analyst research for Latitude started hitting the desks of fund managers last week, with Macquarie Capital expecting the business to be worth somewhere between $2.59bn and just over $4bn.

This was based on expectations of annual net profit being between $236m and $288m and that the company will be valued at between 11 and 14 times its net profit.

Goldman Sachs said it expected annual net profit to hit $288m, based on a growth rate on the previous corresponding period of 7 per cent, saying global comparative companies trade at between 9 and 15 times net profit.

Latitude is owned by Kohlberg Kravis Roberts, Deutsche Bank and Varde Partners and comprises the assets of the former Australian GE Capital consumer business and was acquired by a consortium in 2015 for $8.2bn, including debt.

Run by Ahmed Fahour, the business offers consumer finance through a variety of services, including personal loans, credit cards, car loans, personal insurance and interest free retail finance and is the second largest non-major bank player in the non-housing personal lending market.