Prospa succeeds on second attempt at IPO, sending positive signal to other online lenders

SuppliedProspa co-founders Greg Moshal and Beau Bertoli. Image supplied.

Prospa Group’s successful ASX debut on Tuesday, which came a year after its failed float, has given the whole fintech sector a boost, according to investors.

PM Capital portfolio manager Uday Cheruvu, said Prospa’s float would send a positive signal to other fintech firms eyeing a potential listing on the sharemarket.

“The valuation suggests there’s a lot of excitement,” said Mr Cheruvu. “People are putting a lot of emphasis on the technology, but at the end of the day, it [Prospa] is a credit story.”

“It’s pretty exciting for Australian technology, it’s exciting for fintech,” co-founder Beau Bertoli said.

“When we think about the size of the problem of access to capital for small businesses, this is a massive problem. There’s well over $20 billion per annum, we believe, of funding that’s required to support Australia’s small businesses.”

According to small business lending consultant and former NAB executive, Neil Slonim, the reputation of the small business lending sector rests heavily on Prospa’s fortunes.

“It’s a very important for the credibility of the sector for Prospa to be successful,” he said.

“Small business owners will be more encouraged to seek finance from an alternative lender.”

Aura Funds Management director Brett Craig said the float will open up some capital raising options for small business lenders.

“It shows there is a need out there and capital markets are willing to support the sector,” he said.

Prospa shares debuted at $4.50, a 20 per cent premium to its $3.78 initial public offering (IPO) price, and closed 18 per cent higher at $4.46. This values the company at $720 million.

Prospa raised $110 million from investors ahead of the IPO, valuing the company at $610 million.

About $50 million raised from the IPO went to current investors selling down their stakes, including the two founders.

In its prospectus, Prospa said it was forecasting double digit growth in revenues and loan originations for 2019.

“The board and executive team expect our strong performance to continue, with originations and revenue forecast to grow at 28 per cent and 26 per cent respectively in [this calendar year],” Prospa chairman Gail Pemberton said.

READ MORE: Prospa CEO Beau Bertoli is confident about Tuesday’s bell-ringing, but admits postponing the last IPO ‘wasn’t a great idea’

This article was first published by The Sydney Morning Herald. Read the original here.

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