Latitude Financial’s eagerly awaited debut on the ASX has been pulled for the second time in just over a year.
It was meant to be the biggest Australian initial public offering (IPO) of the year, but those plans have been shelved by Latitude’s owners — US private equity firm KKR, Deutche Bank and Varde Partners.
The KKR consortium decided to cancel the expected $1 billion offering on Tuesday, according to Reuters.
This was due to a large proportion of demand for shares was coming from hedge funds, rather than desired long-term investors.
The information comes from sources who have direct knowledge of the situation but asked not to be identified since they were not authorised to talk to the media.
A Latitude spokesman declined to comment, saying the company expected to make an announcement on Wednesday.
Latitude had filed a prospectus with the regulator last month valuing the finance company at between $2 and $2.25 per share.
But over the weekend, it decided to discount the offer price by up to 20.9 per cent due to low demand.
The firm, which offers easy-access loans and credit cards with minimal paperwork, and its bookrunners were due to finalise the raising on Wednesday.
Furthermore, shares in the new company were due to begin trading on Friday.
Despite expectations that a lower price would give the newly listed shares a better chance of trading higher, the group decided to pull the IPO because it did not have a “high certainty” that would happen, the sources said.
Many investors that would have taken shares in the company were not large, long-term investors and the owners did not want to risk “an adverse after-market outcome”, they added.
KKR, Deutsche Bank and Varde Partners founded Latitude in 2015 when they bought GE Capital’s Australian and New Zealand consumer lending arm for $8.2 billion.
Last year, Latitude deferred a planned IPO that would have valued the business at about $5 billion due to market conditions and a change in management, while the country’s financial industry was also being scrutinised at last year’s banking royal commission.