Buoyant non-bank Xynapse in talks with fund managers

Non-bank lender Xynapse has started pitching to Australian fund managers for an initial public offering priced at 16.5-times forecast profit.

Xynapse management has begun negotiations with fund funding representatives in Sydney and Melbourne, ahead of a planned bookbuild.

Geoff Levy is chairman of Xynapse Ltd. His firm Monash Private Capital will own more than half of the company on listing.  

The company wants to raise $85m for a $262.5m market capitalisation at $2.50 a share. It values the company at 16.5-times the forecast 2020 financial year cash profit according to information shown to potential investors.

Monash Private Capital would be the listed Xynapse’s biggest shareholder with a 50.3 per cent stake. Monash co-founder Geoff Levy is also Xynapse’s chairman and the firm’s stake would be subject to escrow until after the lender’s 2021 financial year result.

The leadership team and employees would own another 13.8 per cent, says the AFR.

Funds were reportedly told that Xynapse had a $506m loan book as at June 30 – across its corporate asset financing and medical professional financing businesses –

The company says the value is expected to rise to more than $900m at the end of the 2020 financial year.

The growth pitch underpins its IPO price at 16.5-times profit – which is about a 20 per cent premium to the big four banks. Funds were told Xynapse was based in Sydney and had about 100 staff in Australia and New Zealand. The company expected $695m in new business in the 2020 financial year and $55.9m cash gross revenue.