SocietyOne among non-bank lenders sweating over stock prices ahead of listing

SocietyOne chief executive Mark Jones.

Private equity firms may have managed to lock in demand for initial public offerings of Latitude Financial, Peter Warren Automotive and Lynch Group in recent weeks, but some of the non-bank lenders slated to hit the boards could be having second thoughts.

Columbus Capital, owned by co-founders Andrew Chepul and Ilias Pavlopoulos, and the Kohlberg Kravis Roberts-owned Pepper Money will probably be waiting to see how Latitude Financial performs when it makes its market debut on April 20 before opting to fire the starting gun on their IPO plans.

Meanwhile, peer-to-peer lenders are also taking a cautious approach.

The challenge for smaller lenders hoping to head for the boards, like SocietyOne, is that comparable listed companies have recently been trading below expectations.

After its shares priced at $3.50 for its initial public offering in the second half of last year, peer-to-peer lender Harmoney is now trading at $2.05, while Plenti’s shares sold for $1.66 in September and they are now at $1.03.

One stock doing slightly better is non-bank lender Wisr.

However, SocietyOne’s intention is to grow and a float is one way to gain access to capital to fund an expansion.

Working with SocietyOne for a potential listing has been Morgans and Evans and Partners. The company has a partnership with Westpac.

Westpac’s venture capital partnership Reinventure has been an investor in the personal and peer-to-peer lender since 2014. It also counts shareholders such as Seven West Media, Consolidated Press Holdings, G&C Mutual Bank and News Corp, publisher of The Australian, among its supporters.

SocietyOne was founded as a peer-to-peer lender in 2011 by Andy Taylor, Matt Symons and Greg Symons (who are not related) and, in 2016, Westpac executive Jason Yetton was hired as the company’s chief executive before Mark Jones took the reins in 2018.

It has originated more than $1bn in loans and has aspirations to wade further into the secured and unsecured car loans market.

Should the company head to the boards in the near term, the expectation is that it would be worth somewhere between $100m and $500m.

With recent IPO deals, the lesson seems to be that they need to be sold at an attractive price to be taken up by the market.

In recent weeks, Lynch Group cut the size of its IPO raise to $206m and lowered its market value to $439.6m, from $484m, for its IPO due to a lack of retail investor demand, while Peter Warren Automotive found early investor support to lock in a price that valued the business at $484m and was slightly below expectations.

Market experts say fund managers are keen to see deals brought to market where the money is being raised to support growth, rather than just a straight selldown by buyout funds.