Prospa still has hopes for IPO, as ASIC issues resolved

Online lender Prospa hopes to revive its stalled IPO, saying regulatory issues have been settled, but won’t say when.

Prospa founders Greg Moshal, left, and Beau Bertoli

Online lender Prospa is still hopeful of getting its stalled IPO off the ground at some point, with the company telling the market that any potential regulatory issues with regards to its prospectus have been resolved.

The company has put its $146 million IPO on hold indefinitely after citing the Australian Securities and Investments Commission’s (ASIC) broader review into small business lending as the reason for its last-minute decision on Wednesday to halt the listing.

According to Prospa, it received a letter from ASIC on June 5, 2018 requesting information. However The Australian understands the letter did not contain any specific requests that would warrant postponing the IPO.

Prospa today told the market it is satisfied that the issues discussed with ASIC are not material to the IPO and no additional disclosure is required in the prospectus.

“ASIC has not raised further queries on the prospectus,” it said in a statement.

Despite the reassurance, the online lender has provided no time frame as to when it will list on the ASX.

The botched IPO is a major embarrassment for the fintech which has been the market leader in the online lending to small and medium businesses. While it has built a significant lead over its peers in the market, there have been ongoing concerns about Prospa’s business model, its loan terms and the slew of extra fees it charges borrowers.

Prospa co-CEO Greg Moshal said the company had received a letter from ASIC a day before the float as part of a broader review of lending contract terms the regulator is conducting.

“Look, we had to play the hand that we were dealt,” Mr Moshal said. “The nature of it being contacted the day before we did have to pause and engage and that is the prudent approach to take.

“It was a very tough decision for us to take on Wednesday but it was the right call to take at the time.”

Mr Moshal said the company believed the ASIC query was not material to the IPO and the regulator had not raised questions about the company’s disclosure or prospectus.

“But we did feel it was in everyone’s best interest that we did pause and regroup and we made the decision to postpone and that is the overview,” he said.

According to Prospa, it still has the full support of the board and its existing shareholders.

“Major shareholders, including Entrée Capital, Square Peg Capital, and AirTree Venture Capital committed over $47m to the IPO (equivalent to almost half of the new funds coming into the company) and continue to be fully supportive of the company,” it said in a statement.

Co-CEO Beau Bertoli said the company had decided to postpone and “regroup”.

“We haven’t finalised a next step decision so we are keeping our options open,” he said.

“Supportive shareholders will be deciding what is the best possible price.”

With AAP