Online SME lender Prospa has officially announced its initial public offering and said it expects to list on the ASX on 11 June 2019.
SME lender Prospa has re-announced its intention to list on the ASX, opening an offer of new shares of $3.78 per share to raise $109.6 million through an initial public offering (IPO).
It is expected that Prospa will have a market capitalisation of approximately $610 million on listing.
While no general public offer of shares will be made available, the offer will comprise an institutional offer (open to institutional investors) and a retail offer, consisting of the broker firm offer (open to Australian retail clients and sophisticated New Zealand retail clients of Crestone, Bell Potter Securities and Macquarie Equities) and a priority offer, which is open to investors in Australia chosen by the company, and an employee offer.
The majority of funds raised will reportedly be focused on funding the equity portion of the loan book and working capital, investment in new products and geographies and to repay corporate debt.
‘Our guiding principles won’t change’
Speaking of the IPO, Prospa chairman Gail Pemberton said: “Over the past few years, Prospa has strategically invested in people and technology, and from the outset, Prospa recognised people would power its success and they have invested in building the right team and culture for the company to succeed. Prospa also designed its technology platform and workflow to be scalable, flexible and supports its growth strategies.
“Prospa has always put the customer at the heart of everything it does. The strength of the customer experience is recognised with a Net Promoter Score in excess of 77, and 68 per cent of existing customers eligible to take another facility with Prospa are doing so.”
“We will continue to invest in the customer experience, technology and people in order to build products and services that allow small businesses to prosper.”
Meanwhile, the co-CEOs Greg Moshal and Beau Bertoli, who founded the fintech in 2012, outlined that Prospa will continue to support small businesses grow and finance their development.
Mr Moshal said: “We started Prospa in 2012 because it was clear to us there had to be a better way. As small business owners, we’d experienced the frustration of missing opportunities because we couldn’t access finance. We found the traditional system slow, cumbersome and disheartening. From the very beginning, Prospa has set out to be the market leader at what we do – lending to small businesses.
“Prospa’s success has been the result of a group of smart, talented and passionate people united around a common mission to keep small business moving. We’ll continue to invest heavily in our people and award-winning culture, creating world-class career opportunities as the business grows.”
Mr Bertoli added: “The financial services industry is changing rapidly, and our role in supporting small business is now even more vital.”
According to the fintech lender, the small-business lending market in Australia represents a “substantial market opportunity”, given that small businesses are a major contributor to the economy, with approximately 2.3 million small businesses in Australia employing 44 per cent of Australia’s private sector workforce and generating 35 per cent of Australia’s GDP.
“These small businesses have been underserved by the traditional banking system, providing an opportunity for Prospa,” the company outlined in a statement.
In a joint letter, the two co-founders added: “As a public company, our guiding principles won’t change. We’ll continue to strive to exceed our customers’ expectations and deliver for all stakeholders. We aim to build a company that creates value over decades, not just years.”
The SME lender said it welcomed a range of “high-quality, long-term investors to the share register”, including current shareholder AustralianSuper.
AustralianSuper senior portfolio manager Shaun Manuell commented: “As Australia’s largest superannuation fund, we are excited to extend our support of the country’s largest fintech lender to small business. As a long-term investor and supporter of Australian business, we look forward to participating in the growth of Prospa as it plays an increasingly important role in servicing a crucial segment of the economy.”
The deal is fully underwritten by joint lead managers Macquarie Capital and UBS.
Current Prospa investors Entrée Capital, Airtree and SquarePeg will not sell any equity as part of the IPO.
Avi Eyal, managing partner at Entrée Capital and non-executive director of Prospa, said: “We are honoured to have worked with Greg and Beau and been part of this incredible Australian growth story from the date Prospa was founded. The Prospa team is world-class and redefining the way small businesses experience finance. After seven years, Prospa has only just started, and Entrée Capital is proud to be a part of that journey.”
This is the second float attempt for the SME lender. Prospa was scheduled to start trading on the Australian Securities Exchange (ASX) in June last year, with a market capitalisation of $576 million after raising $146.5 million through its initial public offering.
However, minutes before listing, the lender revealed in a disclosure to the ASX that there would be a 48-hour delay so that it could “clarify queries raised by ASIC [on Tuesday] in relation to Prospa’s small-business loan terms”.
The lender further noted that these questions were “in the context of an industry-wide review” into unfair small-business loan terms. The SME lender has since undertaken a full review and update of its loan terms and became a founding signatory of the Online Small Business Lenders Code of Practice that aims help make SME loans more transparent and easy to understand.
[Related: Prospa still ‘evaluating’ when to float]