Latitude Shelves Australia’s Biggest IPO of 2019

(Bloomberg) -- Latitude Financial Group Ltd. scrapped what would have been Australia’s biggest initial public offering of the year, sparking concerns that the future pipeline of IPOs in the nation may dry up.

The non-bank consumer lender said in a statement Wednesday it wasn’t proceeding with the share sale, which could have raised about A$1.04 billion ($703 million), citing worries about how the company would trade on debut.

“The board and shareholders were conscious of the importance of ensuring a strong after market for the company,” Chairman Mike Tilley said in a statement. “Latitude is a strong business and its management team will continue to execute on the growth strategy.”

A lack of appetite for new listings might mean more companies hold off or seek private deals this year, according to Nicholas Guest, a Sydney-based partner at accounting and advisory firm HLB Mann Judd.

“I can’t see too many CEOs or boards wanting to push themselves through this process if it’s uncertain,” he said in a phone interview. “If you don’t need to go to the public markets and you’ve got the ability to stay private for longer, you might see that now.”

Latitude’s offering would have surpassed Magellan High Conviction Trust’s A$862 million IPO as Australia’s biggest this year, according to data compiled by Bloomberg. The company was scheduled to start trading on Friday.

The shares were being offered at A$1.78 each, giving it a valuation of around A$3.2 billion, according to terms of the deal obtained by Bloomberg. The offer price was below an initial indicative range of A$2 to A$2.25. Goldman Sachs Group Inc., Macquarie Group Ltd. and UBS Group AG were lead managers of the deal.

Latitude Financial is owned by KKR & Co., Värde Partners Inc. and Deutsche Bank AG, who bought it from GE Capital in 2015. The consumer-focused payments, installment and lending company deferred plans for an IPO a year ago, citing “external market considerations.”

Tuesday’s book-build coincided with retail stocks in Australia tumbling on concerns about weak consumer sentiment, as the central bank warned it has yet to see any evidence that tax or rate cuts were boosting spending.

Guest said there is also an overhang of caution in the Australian market from troubled IPOs elsewhere in the world, by firms such as office-sharing company WeWork and talent agency Endeavor Group Holdings Inc.

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.