Latitude Financial Group IPO

[trader_jackson]

Find out the details here:
https://www.latitudeipo.com.au/offer/

They say interest is mostly towards the $2 mark, although certainly not 'cheap' at $2...

Attachment 10782

[trader_jackson]

https://www.afr.com/street-talk/lati...0191010-p52zer

I was right... it will be at $2...
Key metrics: 12.4x PE / 5.2% dividend yield / $3.5b market cap / raising $1.24b

Bookbuild closes on Wednesday 16 October, listing soon after.

If it was listed at $1.50 I would have been interested (purely as it would represent quite good value in this market) however, I'd rather pay $2 a share (or $2.23 right now) for Flexigroup than Latitude...Latitude on a similar PE, yet FXL better growth prospects (namely, a better BNPL platform)

[Joshuatree]

Guidance was from $2 to $2.25 but it could have been more or less. I so nearly put in for some but didnt like not knowing what price. Was going to try for a stag. One opinion is it will stag really well. Latitude is hugely leveraged too so not the stock to hold if the mkt goes pear shaped.

[whatsup]

Guidance was from $2 to $2.25 but it could have been more or less. I so nearly put in for some but didnt like not knowing what price. Was going to try for a stag. One opinion is it will stag really well. Latitude is hugely leveraged too so not the stock to hold if the mkt goes pear shaped.

I see the funding today was a great success despite a "financial expert" in the Herald or somewhere saying that it was overpriced for what it was offering !

[trader_jackson]

it ain't going ahead... IPO to be pulled in the 11th hour

[trader_jackson]

https://www.afr.com/street-talk/lati...0191010-p52zer

I was right... it will be at $2...
Key metrics: 12.4x PE / 5.2% dividend yield / $3.5b market cap / raising $1.24b

Bookbuild closes on Wednesday 16 October, listing soon after.

If it was listed at $1.50 I would have been interested (purely as it would represent quite good value in this market) however, I'd rather pay $2 a share (or $2.23 right now) for Flexigroup than Latitude...Latitude on a similar PE, yet FXL better growth prospects (namely, a better BNPL platform)

Reality is, you can't list a company that has (in reality) low growth, a middle of the line dividend, fairly high risk business model, topped off with large overhang/presence of existing investors (that everyone knows whats to get out as soon as they can) at a PE of 12.4 (at $2.25)... If it was listed at around $1.50 (the price I would have been interested at) I'm sure they would have got it away easily (there was talk of a last minute deal to reduce the price further to 10x earnings - ie $1.60's), but it was simply to little to late (and the existing shareholders didn't want to discount it further).

Bit of an embarrassment, and I doubt it will be able to have a 3rd run at the ASX... meaning only option now is for a trade sale... and they likely won't get $3.1 billion for it ($1.78 a share)... and certainly not $4b it was in the original prospectus (at $2.25 - the top price)... and the CEO won't be getting a $25m payout either lol

What is intriguing is the timeline of events... (and the question marks it raises)
- KKR, Deutsche Bank and Varde Partners founded Latitude in 2015 when they bought GE Capital’s Australian and New Zealand consumer lending arm for A$8.2 billion.
- IPO planned in 2018 for $5b, although interest was were only around $2b to $2.5b (so they say)... where did the difference between $8.2b and $5b go??
- IPO (again) now full steam ahead in October 2019 for $3.5b to $4b market cap with new push that they are a digital payments company (try ride the BNPL wave - and where did another $1-$1.5b go?)
- Mid October 2019: Morningstar, among others, considers $2 'fair value' and share price would need to come down further before it is attractively priced (how did the IPO brokers not get this feedback prior to pricing Latitude?)
- IPO price on 11th October IPO 'sealed in' at $2 per share ($3.5b market cap)
- IPO price lowed on 15th October in 'the 11th hour' (the last day prior to book build) to $1.78 per share - supplementary prospectus released ($3.1b market cap - where has nearly $1b gone from last years $4b shareholders were wanting/$4b it would have been at $2.25 per share?)
- Talk of lowering IPO price further $1.60's (10x earnings, $2.8b ish) but Latitude's shareholders reluctant to do this
- Where to now for Latitude? How much is it really worth? Probably that $2.5b it was back in 2018 after all I suppose and the shareholders have just been far to ambitious in their valuation metrics... except this time, by going this far, they've basically made themselves unable to try list on the ASX (for a 3rd time)... maybe they should have tried dual listing on NZX and ASX and the brokers pushing things here in NZ a bit more? I'm sure NZ retail market would have had quite a bit of interest with an IPO priced at 5.8% dividend yield... enough interest at least to get it across the line... and I'm sure if they just priced it at around $1.50's (even low $1.60's), they would have got it away with flying colours.

https://www.afr.com/street-talk/lati...0191015-p530pi

[trader_jackson]

Guidance was from $2 to $2.25 but it could have been more or less. I so nearly put in for some but didnt like not knowing what price. Was going to try for a stag. One opinion is it will stag really well. Latitude is hugely leveraged too so not the stock to hold if the mkt goes pear shaped.

I don't think it would stag very well at all... in fact that is one of the reasons the IPO was pulled; because although they may have had enough for the IPO itself, brokers and co were worried it would have been a disaster upon opening, so they say.

[Joshuatree]

Not wrong there. One source i will be ignoring in future