More doubts on Prospa's delayed ASX listing

SuppliedProspa co-founders Greg Moshal and Beau Bertoli. Image: Supplied.

Reports emerged today about possible further delays to the ASX-listing of small business lender Prospa.

Street Talk in the Australian Financial Review reports “serious doubts” about whether the fintech will list as planned on tomorrow after pulling its listing on Wednesday.

“Sources said Prospa’s board was meeting on Thursday afternoon, and it is believed to be leaning towards pulling the deal,” said Street Talk.

Talks were continuing with underwriters Macquarie Capital and UBS, and lawyers Herbert Smith Freehills.

However, the Australian newspaper reported that corporate regulator ASIC was unsure about what prompted Prospa’s delay.

“The Australian understands that the corporate regulator, which met Prospa 24 hours before the original listing date, had not raised any specific red flags pertaining to Prospa’s prospectus,” the newspaper said.

Prospa yesterday postponed its listing just hours before it was due to debut on the ASX, citing queries about its business loan terms raised by ASIC.

“Prospa are seeking to clarify queries raised by ASIC yesterday in relation to Prospa’s small business loan terms, in the context of an industry wide review into financial services small business loan terms,” the company then said.

“Consequently the listing is expected to be postponed for 48 hours.”

The issue of unfair contract laws was raised last week at the financial services royal commission. ASIC was grilled as to why it hadn’t been enforcing unfair contract laws at the big banks.

Prospa is raising $146.5 million in the float at $3.64 per share, valuing the company at $576 million.

Venture capital investors Airtree and SquarePeg have tipped in additional funds to increase their stakes in the the six-year-old business. Entrée Capital will support the IPO to maintain its 34% stake in the company.

Airtree has invested an additional $3 million for 8.4% of Prospa, while SquarePeg put another $10 million in to increase its holding to 4.4% from 3.2%.

Prospa, founded in 2012 by Greg Moshal and Beau Bertoli, lends between $5000 and $250,000 to small businesses, with $200 million in loans currently on its books.

The lender says “small businesses are under-served by banks”.

Prospa’s net revenue almost doubled between 2016 and 2017, from $23.1 million to $53 million. It is forecasting $96.7 million net revenue this financial year.

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