It seems the Latitude Financial Services Group Ltd (ASX: LFS) share price is finally going to hit the stock boards tomorrow (Tuesday) with its long-awaited ASX IPO. The IPO has been on-and-off-again since 2019, when it was first rumoured Latitude will be making its IPO.
That didn’t happen.
Latitude is a leading digital payments, instalments and lending platform, with ~2.8 million customer accounts and roughly 2,000 merchant partners across Australia and New Zealand.
It has products like LatitudePay, Genoapay, Gem Visa, GO Mastercard and Creditline. It also offers lending products like credit cards, personal loans and motor loans. In some markets, it competes against Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and others.
According to ASX data, Latitude is planning to raise $200 million from investors — less than the $1 billion originally planned. Since COVID, the S&P/ASX 200
(ASX: XJO) has moved swiftly upward and increased demand from investors.
See: Why do companies IPO?
3 things to watch when Latitude (LFS) shares IPO
Lots of volume
Latitude shares are expected to IPO at $2.60 a pop, giving the company a market valuation of $2.6 billion. This makes it the largest ASX IPO in over a year.
Given the market for IPOs has been busy — and the offer was scaled back — there may be a significant amount of trading in LFS shares tomorrow. We’ll have to wait and see!
Potential exits
Over the coming months and years, I’m interested to see if the current owners of Latitude – being private equity firm KKR, Varde Partners and good ol’ Deutsche Bank – sell down their stake. Or rather, how fast the sell-down happens.
Management stability
It has been widely publicised in recent years that Latitude’s CEO, Ahmed Fahour, stood to make a fair sum of money if he and his team were able to ‘get this one away’.
According to SMH reporting, Mr Fahour has purchased options and stands to benefit if the company’s valuation hits $3.4 billion.
Latitude management commentary
Latitude Chairman Mike Tilley said: “Listing on the ASX will provide Latitude with access to public equity capital markets and greater financial flexibility as it pursues further growth opportunities. Following completion, the existing owners remain committed to Latitude and are expected to hold approximately 66% of the issued shares”.
Meanwhile, Latitude Managing Director and Chief Executive Officer Ahmed Fahour
said: “Latitude is a highly profitable business, with more than 2.77 million customer accounts and a focus on interest free instalments and lending. The business has significant opportunities to work with our partners to expand further in our Australia and New Zealand domestic markets and offshore. We also continue to invest in technology as we shift to a lower-cost digital platform model”.
Now what?
For those investors who got shares in the IPO, I imagine this evening may make for a light sleep ahead of the IPO float tomorrow.
Here at Rask Media, we’ll be covering Latitude’s IPO closely — from the sidelines. I have no dog in this fight.
For my money, I’d much rather buy shares of proven, established companies with a robust long-term history on the ASX, such as the company in our free investment report below.
