Japan’s Shinsei Bank to propel Latitude Financial to an IPO
Latitude Financial hopes it will be third time lucky hitting the ASX boards after Japan’s Shinsei Bank acquired a 10 per cent stake in the non-bank lender.
Latitude Financial has welcomed a fourth key investor after Japan’s Shinsei Bank acquired a 10 per cent stake in the non-bank lender, valuing the company at $3bn ahead of a third tilt at the ASX boards.
Shinsei acquired the stake for $300m from Latitude’s three main investors KKR, Deutsche Bank and Varde Partners, which will underpin overseas expansion plans.
Latitude chief executive Ahmed Fahour said Latitude and Shinsei would form an alliance to explore mutually beneficial growth opportunities in the Asia-Pacific region that “leverage their relative strengths and capabilities”.
It comes as the company prepares for another potential float, which could happen as early as later next month.
The Australian’s DataRoom column revealed Bank of America and Credit Suisse were poised to be mandated on a deal, along with Jefferies Australia. The arrival of Shinsei allows Latitude’s three existing investors to take money out of the company ahead of a potential float.
“Shinsei’s investment highlights the attention overseas investors are showing in Latitude as the leading provider of interest-free shopping and consumer finance, offering customers a broader range of products that responsibly meet their needs,” Mr Fahour said.
“This substantial investment and strategic alliance will help accelerate our growth plans in Australia and New Zealand, particularly with interest-free shopping and the boom in the home economy, while Shinsei’s expertise in financial services will assist with Latitude’s overseas expansion.”
Shinsei — a diversified financial services company listed on the Tokyo Stock Exchange, providing institutional and retail services — signed the deal with Latitude late on Wednesday.
Its international subsidiaries include UDC Finance in New Zealand, which it acquired from ANZ last year.
Shinsei president and chief executive Hideyuki Kudo said: “We are delighted to invest in Latitude and excited by the opportunity to provide long-term support and value to a business that will deliver strong cashflow and profit growth.
“We were impressed by Latitude’s successful graduation model and ambition to build on its leadership in instalments and lending. We look forward to developing a partnership that will create new opportunities, leveraging both our strengths.”
Latitude chairman Mike Tilley said Shinsei’s investment complemented Latitude’s existing global ownership structure.
“The board looks forward to working closely with Shinsei and the existing investors as we enter an exciting new phase for our business,” Mr Tilley said.
“Latitude has emerged from 2020 in great shape. We continue to invest in the company’s digital transformation in support of our merchant partners, which include leading global and local brands, and to enhance the experience of customers.”
After two failed IPO attempts, Latitude has been buoyed by a strong performance by competitor Liberty Financial, which listed in December last year.
It is understood this time around that Latitude is considering a compliance-only listing where the selldown involves about 25 per cent of the business.
Latitude has been working hard on boosting its profile in the past year, signing on a string of new retailers as it reaps the benefits of the working-from-home and renovation boom.
It has also signed a sponsorship deal with reigning AFL premier Richmond to further increase brand awareness.
“This sponsorship is only one announcement of a multitude of investments that we are going to roll out over the coming months,” Mr Fahour said last month.
Latitude also overhauled its Latitude GO MasterCard last month, introducing a six-month interest-free period on transactions above $250 and a reduced interest rate of 19.95 per cent on credit card purchases.
“In the past, shoppers would have to use different payment options for different transaction sizes to benefit from interest-free. Now, Latitude GO customers will be able to shop interest-free for both small and large purchases, seamlessly on the one digital or physical card,” Mr Fahour said.
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