Latitude financial IPO seeks $1.4b in public funding from float

Non-bank lender, Latitude Financial Group has raised the stakes in the banking wars by seeking as much as $1.4b in an initial public offering to support its challenge for a share of the Australian personal loans market.

Latitude is a consumer finance company whose customers include bigger retailers like Harvey Norman.

It expects its IPO to raise between $1.24b and $1.4b with the shares being worth between $2 and $2.25 under a broker firm offer and institutional offer.

The Financial Review says the price represents an earnings multiple of 12.4 times to 13.9 times and new shareholders will own 35 percent of the total equity after the offer.

The deal is was at 12.4 to 13.9-times profit, based on forecasts for the 12-months to June 2020, and implies a 4.6 percent to 5.2 percent yield.

Latitude’s CEO is Ahmed Fahour, the former boss of Australia Post, where his salary with bonuses, was said to challenge $5m a year.

He will have 12.6 million shares in Latitude after the float and the prospectus shows his remuneration package includes $1.8m fixed pay, $1.8m in short-term incentives and $1.24m in long term incentive for a potential payday of $4.84m.

Latitude has a lending book of $7.6 billion, and 2.6 million customer accounts. 

Latitude’s arrival continues the upheaval in Australian financial corridors with new start-up banks chasing financial support and a prominent place in the loan market. 

One of the start-ups, Xinja has made it clear it intends to become a major disruptor in the Australian retail banking system will underline its appeal to the market by offering better service and home loans that take just seven minutes to approve.

Xinja is now looking to raise at least $50m from investors after being granted an unrestricted full licence from APRA, the Australian Prudential Regulation Authority

Xinja joins other startup banks, 86 400 and Judo, in getting APRA’s approval. 

Other start-ups will also seek APTA licences as Australia follows overseas trends of acknowledging exclusively on-line banking.

CEO and founder of Xinja, Eric Wilson, says the bank is now in a position to accept deposits from customers and is planning to offer savings accounts later this year and loans in early 2020.

Mr Wilson, whose banking background includes time with the National Australia Bank, said offering more attentive service to customers would be a feature of Xinja’s appeal.

“It’s enormously exciting that Australians have a new, independent bank,” he said. “It’s time Australia’s very old banking model was disrupted.