- Online small business lender Prospa will list on the ASX on Tuesday, intending to raise $110 million following a successful $43 million pre-IPO round.
- The listing is Prospa’s second attempt at going public, having indefinitely postponed its IPO just minutes before a scheduled bell-ringing ceremony in June 2018.
- Prospa co-founder and co-CEO Beau Bertoli told Business Insider Australia the IPO postponement was a “tough call” and took an emotional toll, but hasn’t altered the fintech platform’s growth ambitions.
If Beau Bertoli is nervous about listing his company on the ASX on Tuesday, it isn’t showing.
Speaking to Business Insider Australia from Prospa’s pastel-coloured Sydney HQ just days out from an initial public offer it hopes will raise $110 million, the online lender’s co-founder and co-CEO reeks of forward-looking positivity.
“We are confident,” he said. “You couldn’t recreate last year if we tried.”
The comment is a reference to Prospa’s botched attempt to join the ASX in June 2018, when it mysteriously postponed the IPO just minutes before it was due to list.
At that time, the fintech disruptor was fairly tight-lipped about the circumstances that led to its decision to pull the pin, with a statement to the ASX pointing vaguely to “queries” having been raised by ASIC at the 11th hour.
But 12 months on, and with a successful $43 million pre-IPO under his belt in the interim, Bertoli is now more forthcoming as we chat on the building’s sun-drenched terrace in the glare of St Mary’s Cathedral – an appropriate view, given the upcoming bell-ringing.
He explained that just one day before the due listing, ASIC issued what he described as a “business-as-usual” communication that contained new information that may or may not have been “material” and therefore would require disclosure to investors pre-IPO.
Bertoli and co-founder Greg Moshal postponed the listing for 48 hours while they sought legal advice and consulted with their investment bankers at UBS and Macquarie. By the time they reached the decision that the new information was actually “not material” there had been so much noise around the failed IPO that “the momentum had gone a bit” and they announced an indefinite postponement, fearing a stock price slide.
While Bertoli still declined to comment on the specifics of ASIC’s concerns, or the charge published by The Australian newspaper that in fact ASIC had no such concerns, he did open up about the human impact of the incident and has some advice for other budding entrepreneurs.
“On reflection, postponing an IPO wasn’t a great idea,” he said. “For anyone out there who’s looking to list a company, my advice would be to go if you’ve got it.”
Clearly Bertoli has mixed feelings about the incident, though, as he went on to backtrack from the regret somewhat, saying he “wouldn’t change a thing”.
“It’s definitely disappointing to have done all the work to get ready for a listing and then have to press pause,” he said.
“[But] you have to play the hand you’re dealt. You can reflect on these things a hundred times over, but as an entrepreneur or business owner sometimes you have to go with your gut. It was a tough call.”
He and Moshal were “down” emotionally following the failed listing, having worked so hard to pull together a compelling investor proposition, and having lost at least $7 million of their own money in the process.
While he is candid about the impact the incident had on him personally and the Prospa workforce – who he says “rallied around” the two founders and CEOs and hit record trading targets in the immediate aftermath of the postponement – Bertoli is not one to wallow in the past.
“We’ve tried not to let it slow us down,” he said. “We are coming back to market essentially 50% bigger than we were in the year before. We have a much improved proposition.”
That improved proposition is not only thanks to its successful pre-IPO fundraising – which saw industry super fund giant AustralianSuper make its first official investment in Prospa, a stake Business Insider Australia understands will be as large as 5% after Tuesday – but also due to more favourable market conditions.
Following his banking royal commission, former High Court Justice Kenneth Hayne not only decided against potential changes to regulation of small business lending, but also called out a lack of competition and access to capital as major issues, seemingly singing straight from the Prospa hymnbook.
The federal government’s introduction in November 2018 of an Australian Business Securitisation Fund, which will allow non-bank lenders like Prospa to offer “more competitive terms” than the big banks with government assistance, has also been a boon, Bertoli said.
And, despite the drama and disappointment of last June’s near-listing, Prospa’s customers, staff, advisers and investors have stuck with them into this next IPO, as well as mustering endorsements from big players like AustralianSuper.
“People like a comeback story,” he said, before adding cautiously: “not that we see it that way”.
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