Payments giant Cuscal launches Australia’s largest float of the year

Payments infrastructure giant Cuscal has taken a major step towards debuting on the ASX after launching Australia’s largest float for 2024.

Cuscal has kicked off an institutional investors roadshow with the bookbuild for the float expected to close on November 21 and ASX listing set for November 25. Picture: NewsWire / Max Mason-Hubers

In a year marked by general investor caution, payments infrastructure giant Cuscal has taken a major step towards debuting on the ASX after launching Australia’s largest float for the year.

With an expected market capitalisation of $449m, the Sydney-based company has lodged a prospectus for an initial public ­offering with the financial regulator and the expected financial windfall is set to underpin future growth.

Cuscal – which has made moves to list previously – has kicked off an institutional investors roadshow with the bookbuild for the float expected to close on November 21 and ASX listing set for November 25.

Cuscal managing director Craig Kennedy said that, outside of the major banks, Cuscal was the largest centralised provider of payments infrastructure in the Australian payments industry.

“Becoming a publicly listed company will enhance our ability to serve our clients and stakeholders,” he said.

The IPO is for 134.7 million shares at a price of $2.50 a share.

The offer size of about $337m comprises $40m of new capital to be raised by Cuscal, with the remaining $297m enabling existing shareholders to realise part of their investment in the company’s shares.

As well as a growth strategy, the proceeds Cuscal will receive from the issue of new shares under the offer will initially be invested in investment securities.

The company also expects the funds to be used to support working capital requirements; maintain a strong balance sheet and meet regulatory capital requirements; and support continued investment in system resilience.

Operating since 1966 through its earliest predecessor, the Australian Federation of Credit Union Leagues, Cuscal provides payments and data to Australian banks, credit unions, mutual savings banks, corporates and fintechs. It is owned by Mastercard, Bendigo and Adelaide Bank and most of the big credit unions.

As a B2B provider, Cuscal ­operates in the infrastructure layer of the payments market, connecting clients to local payments infrastructure.

Cuscal’s business model includes the provision of three core payments capabilities, including issuing, acquiring and payments.

It is also building capabilities in the emerging regulated data services industry and, while in its early days, it is anticipated that this may provide additional opportunities for growth.

Shares will be made available for investors through brokers, to employees and directors, and institutions. There will be no general public offer of shares.

There are early indications that interest for the institutional offer and the broker firm offer will exceed the deal size, with the company having already met Asian fund managers. The offer is not underwritten.

Over the 2024 financial the company reported operating income of $284.5m, up 18 per cent on the previous year, while it had a net profit of $32.9m.

Cuscal chairman Elizabeth Proust said the company played a crucial role in supporting connectivity to the Australian payments infrastructure for a diverse range of clients, which “sets us apart in the industry”.

“Lodging our prospectus ahead of an ASX listing represents a significant milestone in Cuscal’s journey, with the fundamental purpose of becoming a listed company being to give Cuscal deeper access to funding sources and provide the management team greater flexibility to execute growth initiatives,” she said.