Liberty forges ahead with IPO plans as TPG shows interest

Liberty Financial may be shaking off suggestions that TPG Capital has been circling for a potential acquisition, but the company is still said to be moving forward on plans for an initial public offering.

As revealed by this column earlier, Credit Suisse is working with Liberty for a potential IPO.

However, talk in the market suggests that TPG Capital is keen to join its private equity rivals in becoming the owner of a major non-bank lender and has its eye on the company it partnered with some years ago.

In 2015, TPG and Liberty jointly pursued what was then the Australian and New Zealand General Electric Consumer Finance business, now rebranded Latitude Financial Group.

The US-based buyout fund is among several currently focused on financial services assets on offer in the market in a low interest rate environment.

They are looking to capitalise on opportunities for non-bank lenders following a crackdown on Australia’s major financial institutions in the aftermath of the royal commission into banking.

Suggestions have also surfaced that Lone Star Funds could also be a contender to buy Liberty Financial, given it has been actively looking at Australian assets in the space of late, although the US-based group is known to scan the market widely before committing to an acquisition.

Liberty chief executive James Boyle said there had been no talks with TPG Capital about a sale, but he would not comment on plans for an IPO.

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Many around the market believe the IPO plans remain alive and well, with the appetite of fund managers for a deal tested in recent weeks.

Working at TPG Capital in Australia now as a senior adviser is former JPMorgan banker Jason Mcleod, who historically has a close relationship with Liberty Financial’s founder and executive director, Sherman Ma.

Should in future TPG acquire Liberty Financial, as some are suggesting, it would join its peers Kohlberg Kravis Roberts, Blackstone and Varde Partners in owning non-bank lenders.

KKR and Varde own Latitude Financial Group with Deutsche Bank, which made unsuccessful efforts to float on the Australian Securities Exchange this year, while Blackstone owns La Trobe Financial Services.

KKR also owns Pepper Group and plans to sell Pepper’s Australian assets via a float so far scheduled for around May next year.

One thought among market analysts is that TPG could use Liberty Financial to put its own credit fund products into the business.

Formed in 1997, Melbourne-based Liberty has grown into one of the nation’s biggest non-bank lenders, offering home, car, business and personal loans and was previously estimated to be worth about $1bn.

For the year to June 30 last year, Liberty’s profit after tax was $39.98m, slightly higher than the $38.1m it generated in the previous corresponding year, with its total assets increasing to $10bn, from $7.38bn, according to company accounts.