Prospa’s blow to bankers

The Prospa board’s decision to shelve its public market listing indefinitely is a major blow to its corporate advisers UBS, Macquarie and law firm Herbert Smith Freehills.

Prospa, the online lender, raised $146.5 million in a bookbuild carried out last month and was due to list with a market capitalisation of nearly $576m.

A deal of that size would normally have been handled by mid-tier brokers, but the lack of capital market deals meant the mandate was seized on by the likes of UBS and Macquarie.

Having pulled the float on Wednesday just 15 minutes before it was due to list on the ASX, was embarrassing enough for the advisers. However, shelving the float indefinitely is a huge blow for the investment banks and HSF which considers itself the top firm especially on capital market transactions.

UBS and Macquarie are the top ranked ECM banks and jealously guard their market share and the coveted top positions on league tables.

The Prospa transaction was the second largest primary capital issuance of the year and its performance on the public markets was seen as key for more deals to be bought forward later this year.

In a short statement last night, the company said it would provide a briefing on the “matters raised by ASIC in the context of the industry wide review”.

However, ASIC has flagged it never raised the prospect with Prospa of pulling the float so the reason for linking ASIC’s reviews with the decision is uncertain.

The company and its bankers could not explain the two events yesterday.

One reason for putting the deal on hold last night is expected to have been the pressure from the shareholders who bought into the bookbuild that was carried out on May 17.

The investors were aware that ASIC was investigating non bank, small bank and fintech activity in business lending. However, the escalation on Prospa’s behalf of the investigation is believed to have prompted the company’s existing and new shareholders to become ultra cautious.

Putting the deal off also protects the company’s share price from tanking on its first day as a publicly listed entity.