What do you think of the Latitude Financial IPO?
A: This is the second time the private equity owners of Latitude Financial have attempted to IPO the business, so I guess I am somewhat underwhelmed by the prospect of investing. The business (formerly the GE Finance business) is interesting, but hardly compelling.
The description of the business as a “digital payments, installments and lending platform” is interesting – I guess this is what they mean by “Latitude 2.0”.
Pricing is not aggressive (indicative 12.4x to 13.9x the 12 months earnings to 30/6/20), and retail shareholders have comfort in that institutional investors will set the price via a book-build.
The first dividend (estimated to be 5c) won’t be paid until October 2020.
A major risk for IPO investors are the escrow agreements and potentially, a flood of stock hitting the market. A group described as “minority shareholders”, who will hold approximately 9% of the shares, are only escrowed until 29/1/20. The private equity owners (KKR, Varde and Deutsche Bank), who will own around 54% of the shares, are only escrowed until the release of 1H20 accounts, sometime in August 2020.