Liberty Financial plots $1.8bn float

Liberty is expected to tell potential investors the pandemic has had minimal impact on its book, with loans on repayment pauses sitting at about 0.4 per cent.

Non-bank lender Liberty Financial is set to join the ranks of 2020’s biggest floats, with the $1.8bn company planning to join the ASX before Christmas.

DataRoom understands Liberty and its advisers are full steam ahead on listing plans and prospectus lodgement.

Credit Suisse is spearheading the Liberty IPO and analysts are expected to release detailed research on Monday. The deal team is rounded out by co-managers Shaw and Partners and Evans & Partners.

The research is expected to be followed by a management roadshow and bookbuild in the last week of November.

Sources said Liberty’s shareholders — including founder Sherman Ma — would only sell down about 20 per cent of the company to participate in any future upside.

Investors will no doubt want to clarify the risks stemming from COVID-19 loan repayment deferrals, given a large proportion of Liberty’s customers don’t meet the major banks’ criteria.

But Liberty is expected to tell potential investors the pandemic has had minimal impact on its book, with loans on repayment pauses sitting at about 0.4 per cent.

Still, non-banks are also in talks with Treasury over access to funding, given many claim they are losing market share, as banks access cheaper Reserve Bank funding.

Listed non-bank lenders include Resimac, while Pepper was taken off the ASX in 2017, following a takeover by KKR & Co. The private equity giant had been planning a 2020 float of Pepper’s Australian and New Zealand operations, before COVID-19 derailed preparations.

Liberty and its advisers obviously want to get in first.

Sources said Liberty’s cash net profit was expected to be $160m-$170m in 2020-21, which could give it a market capitalisation of more than $1.8bn, depending on how investors value Liberty versus comparable ASX companies.

The Australian last week revealed Judo was targeting an IPO in the latter half of 2021 with adviser Goldman Sachs, while investors were being told to expect a Liberty float priced at around 11 times forward earnings before interest, tax, depreciation and amortisation.

Ma has had to change the complicated structure of the company and its tax affairs to get the IPO off the ground after several earlier attempts.

Liberty has total assets of more than $13bn and investors are likely to be told of 19 per cent compound annual loan book growth over the past decade.

joyce moullakis