Liberty Financial prices IPO at $6 a share

Propsective investors in Liberty Financial are expected to provide a high level of scrutiny to the quality of its loan book as the non-bank lender makes efforts to raise up to $364m through an initial public offering.

Liberty has locked in a $6 share price for its IPO and will raise between $321m and $364m as part of its hopes to list with a $1.822bn market value.

However, as the company does the rounds with investors, the concern among some is that the lender has non conforming loans with margins that are up to 6 times higher than those with the banks, and this is expected to make the quality of its loan book a key focus.

Retail investors are expected to be heavily targeted, with Evans and Partners and Shaw and Partners on board of the deal along with Credit Suisse, although it is thought that a handful of institutional investors have agreed to take small cornerstone stakes in the company, with a 20 per cent interest in the business on offer.

Liberty will offer a 5.1 per cent annual distribution yield to investors, which retail investors will no doubt find attractive.

The $6 per share price for the IPO equates to 11 times the company’s net profit.

The founder group, excluding Sherman Ma, will sell a 17.6 per cent to 20 per cent interest in their holdings, as Liberty prepares to lodge its prospectus on November 26 with the company to list on December 17.

The financial group was to hold up to 40 meetings with prospective institutional investors, starting from late this week and the institutional book build will be launched on Wednesday.

The business was founded by now US-based Sherman Ma in 1997, after he worked at Credit Suisse and McKinsey & Company.

He remains an executive director, with the chief executive being James Boyle.

Analyst research this week points to an expected adjusted net profit of $165.6m for Liberty in 2020-21, up from $142m in the previous corresponding period.