ASIC probes Latitude IPO plan

Ahmed Fahour - CEO of Latitude Financial Services Group. Picture: Stuart McEvoy

Market surveillance experts from the James Shipton-led corporate regulator ASIC have spent Wednesday assessing material relating to the humiliating failed $3.1bn float of the Ahmed Fahour-led Latitude Financial.

Margin Call understands regulatory authorities spent the day combing through the Mike Tilley-chaired financial services group’s market disclosures over the course of the float process.

READ MORE: Latitude Financial Group pulls IPO

Latitude’s sharemarket offer was set to be this market’s biggest float of the year.

Of particular interest to Australian Securities and Investments Commission authorities is believed to be the update sent to market participants on Tuesday at lunch time, indicating demand into the underway bookbuild for Latitude shares exceeded supply.

“Demand — comprising early indications of demand and firm orders in the book — currently exceeds the expected offer size, assuming $330m is allocated to retail,” the $1.04bn raising’s joint lead managers UBS, Macquarie and Goldman Sachs told the market about four hours before the bookbuild was set to close.

“The retail networks have been asked to confirm their broker firm allocations over the course of today [Tuesday].”

The market missive prompted several reports that the offer looked like being a success, despite that organisers would within hours pull the already downwardly revised offer after the bookbuild’s 5pm close.

ASIC plays an active role in the market for IPOs as well as other capital raisings, to ensure the market is working properly and that both retail and institutional investors are able to make informed investment decisions.

The regulator is amid a civil legal action over a separate $2.5bn capital raising by ANZ that is also the subject of a criminal cartel case brought by the ACCC.

ASIC is claiming ANZ breached its continuous disclosure obligations by failing to inform the market that $791m of the total $2.5bn placement had been taken up by underwriters Deutsche Bank, Citigroup and JPMorgan.

Tuesday’s shock withdrawal of the Latitude float is the second time that the company’s owners — comprising private equity giant KKR and Varde Partners with 35 per cent each and Deutsche Bank with 30 per cent — have had to pull plans to IPO the company.

A spokesman for the corporate watchdog confirmed to Margin Call that ASIC was gathering and assessing material relating to the float, which was set to raise $1.04bn from investors at the revised price of $1.78-a-share.

This included disclosures beyond Latitude’s prospectus and supplementary prospectus, which was released at the start of this week to lock in the float’s final price.

This meant that investors were only bidding into the book on Tuesday for final allocations of stock, with the final price already set in stone.

Where this latest ASIC fact finding mission goes, we shall see.