More than a year after Prospa delayed its initial public offering (IPO) plans, the Australian alternative lender is once again gearing up to go public — and hoping lower interest rates will quell concerns.
Reports in the Sydney Morning Herald on Thursday (May 16) said Prospa’s interest rates have been dropped to 26.5 percent as it plans its IPO for next month. The company published its prospectus Thursday as well, noting that it plans to float on the Australian Securities Exchange (ASX) on June 11, more than one year after it nixed previous IPO plans at the 11th hour.
Earlier this year, its average weighted annual percentage rate stood at 36 percent, the publication said.
Its sudden IPO reversal last year was the result of backlash among regulators and borrower advocates that its small business loan contracts included unfair terms. The Australian Securities and Investments Commission (ASIC) required Prospa to change its contracts last year to address key concerns, including the company’s contractual requirement that small businesses compensate Prospa for any losses related to its own “fraud, negligence or willful misconduct.”
The ASIC also required the company to provide a 60-day notice to small businesses in the case of any changes in its fee structure.
Following that regulatory scrutiny, Prospa launched its SMART Box tool, a standardized display for small business borrowers of key metrics of their loan agreements. Earlier this year, the company also announced its adherence to the nation’s Code of Lending Practice, a voluntary code for the alternative lending industry to promote fairer terms with borrowers.
Last year, Prospa set a market capitalization of about $576 million before cancelling its IPO plans. Reports this week said the company hopes to raise about $75.84 million, with a valuation of about $420.6 million. The firm is also projecting continued growth for the firm.
“The board and executive team expect our strong performance to continue, with originations and revenue forecast to grow at 28 percent and 26 percent, respectively, in CY19,” said the firm’s Chairman Gail Pemberton in the prospectus.