KKR & Co Cuts IPO Price for Latitude Financial

Latitude Financial’s Owners Seek to Raise More than $1 Billion

KKR & Co and its investment partners will lower the IPO price for their Australian non-bank lender Latitude Financial. A Reuters report indicates that the private equity giant could drop the price by at least 11%. This is likely a disappointment for KKR & Co. and its partners Deutsche Bank and Varde Partners. This is the second attempt to list Latitude by the companies.

Last month, the companies issed a prospectus that set a valuation between A$2 and A$2.25 per share. The Wall Street Journal reported that KKR and its partners sought to raise $945 million in the IPO. However, that figure was originally higher – upwards of $1 billion to $1.25 billion when the firms started kicking the tires.

Reuters reports that the new offering price sits at A$1.78. That figure reflects a valuation of 11 times profit and a dividend of 5.8%

KKR & Co Eye Latitude Financial IPO

It has been a difficult two years for Latitude Financial. The company faced a probe from the Australian Securities & Investments Commission (ASIC) over alleged misconduct. The firm refunded $1.1 million to 905 customers after it mis-sold credit insurance to these individuals. The regulator also said the firm declined claims to credit card customers due to a faulty automated process.

The probe negatively impacted expected efforts to launch an IPO in 2018. The three companies had purchased Latitude in 2015 when the firm had a enterprise value of $8.2 billion.

Meanwhile, the company has seen new competition arrive in the form of digital-only banks, payment firms, and other Fintech startups.

[Related: Libra Association to Meet in Switzerland to Discuss Digital Assets: Make or Break?]

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January 16, 2020

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