Lendi IPO looking sound

Lendi gets positive reception as it fronts fund managers for an initial public offering this month.

A number of the initial public offerings slated to list this year are attracting a positive reception from fund managers, with mortgage provider Lendi among those proving popular.

It comes as investors remain keen to gain exposure to online businesses and put money to work amid a low interest rate environment.

Lendi is fronting fund managers for an initial public offering this month.

The company has about $40m of annual revenue and a 60 per cent gross profit margin, and working on the float plans is Macquarie Capital and Bell Potter.

The attraction for many is that Lendi is the online mortgage market leader, with a market share of about 90 per cent.

Expectations are that it will list as a business worth between $500m and $550m..

The plans to move forward with an IPO by the end of the year were first revealed by DataRoom last month, with meetings scheduled with investors following reporting season.

Macquarie Group is a part owner and had considered a float before, with plans to raise about $100m.

Another investor is ANZ Bank.

Lendi describes itself as a home loan specialist. It searches products from over 35 lenders.

It launched in 2013 and has helped Australians settle home loans worth more than $7bn in total.

Other initial public offerings gathering steam include Adore Beauty and DDH1.

Private equity firm Quadrant is selling the online cosmetics retailer Adore Beauty, along with its founder, Kate Morris, and prospective investors are meeting with the company this week for the second time to cornerstone the deal.

So far, the expectation is that the business is to be worth close to $600m and will raise at least $200m, with the owners to offload an interest worth at leastr $165m.

The company has had a positive reception.

Meanwhile, mining services provider DDH1 Drilling is making a second attempt at an initial public offering after trying to list last year.

Working on the IPO is Macquarie Capital, UBS and Bell Potter.

So far, there is divided opinion in the market about the business, which is the country’s most specialised provider of Diamond Core drilling.

DDH1 operates at 36 sites and is seen as a strong performer in its industry, but some fund managers have little appetite for businesses in the mining services sector.

With Bell Potter on the ticket, the likelihood is that retail investors will be encouraged to participate in the float.

On the positive side, DDH1 is riding the wave of the booming gold mining industry.

The company, which is owned by Oaktree Capital Management, generates about $65m of annual earnings before interest, tax, depreciation and amortisation.

The understanding is that it is keen to list as a business worth five to six times that number.

However, listed comparable Mitchell Services trades at about three times its earnings.

Some sources say that the company at one stage was considering a listing in Canada, where groups in that sector generate about nine times their earnings.

But DDH1 generates all of its earnings from the Australian market.