Abu Dhabi, UAEWednesday 13 November 2019

Australian lender Latitude says KKR and partners cancelled IPO on low prices

Some investors were not prepared to offer 'fair value', according to the Latitude chief executive

The KKR name is displayed on a screen on the floor of the New York Stock Exchange. KKR, Deutsche Bank and Varde Partners founded Latitude in 2015. Reuters
The KKR name is displayed on a screen on the floor of the New York Stock Exchange. KKR, Deutsche Bank and Varde Partners founded Latitude in 2015. Reuters

Private equity giant KKR and its partners cancelled what was to be Australia’s biggest listing of the year, lender Latitude Financial, because investors would not pay a price that reflected its value, the Latitude chief executive said.

In what was to be their second attempt at listing in more than a year, KKR, Deutsche Bank and Varde Partners pulled the expected A$1 billion (Dh2.47bn) offering late on Tuesday, according to sources, even after finding buyers for all its shares.

In an email to Latitude staff on Wednesday, Latitude chief executive Ahmed Fahour confirmed the initial public offering was cancelled but said the company would continue as a private enterprise.

“Feedback from investors has been overwhelmingly positive and although demand has been strong, some investors have not been prepared to offer a price per share that reflects a fair value given the strength and performance of our business,” Mr Fahour wrote.

“For this reason our shareholders have decided not to proceed with the listing process at this time, a decision that’s in the interests of our business, our people, our customers and partners."

A Latitude spokesman said the email was authentic.

“While it’s disappointing not to list at this time, Latitude is stronger than ever, which means better outcomes for our people, customers and partners,” Mr Fahour wrote, without offering information about any future listing.

Latitude had filed a prospectus with the regulator last month valuing the company at between A$2 and A$2.25 per share but over the weekend decided to discount the offer price by as much as 20.9 per cent due to low demand.

The company, which offers easy-access loans and credit cards with minimal paperwork, and its bookrunners were due to finalise the raising on Wednesday and shares in the new company were due to begin trading on October 18.

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$8.2bn.

Last year, Latitude deferred a planned IPO that would have valued the business at about A$5bn due to market conditions and a management change, while the country’s financial industry was also being scrutinised by a national misconduct inquiry.

Updated: October 16, 2019 10:53 AM

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