Botched IPO a poor look

But Prospa adamant regulatory issues resolved

ONLINE lender Prospa says it is still hopeful of getting its stalled initial public offering off the ground and all potential regulatory issues have been resolved.

The company has now put its $546 million float on hold indefinitely after initially deferring it for 48 hours in a lastminute decision on Wednesday.

It had cited the Australian Securities and Investments Commission’s broader review into small-business lending as a reason for the initial delay.

According to Prospa – which specialises in easy-toaccess but high-cost loans for small businesses – it received a letter from ASIC on Tuesday requesting information.

However it is believed the letter did not contain any specific requests that would warrant postponing the IPO.

Prospa told the market yesterday it was satisfied the issues discussed with ASIC were not material to the float and no extra disclosures were required in its prospectus.

“ASIC has not raised further queries on the prospectus,” it said in a statement.

Despite the reassurance, the online lender has provided no time frame as to when it will proceed with a listing.

The botched IPO is a major embarrassment for the financial technology group, which had planned to tap investors for $146 million, giving it a market value of almost $550 million.

Despite its costly interest rates, Prospa has become the market leader in online lending to small and medium-sized businesses.

While it has built a significant lead over its peers in the market, there have been ongoing concerns about Prospa’s business model, its loan terms and the slew of extra fees it charges borrowers.

According to Prospa, a float still has the full support of the board and its existing shareholders.

Co-chief Beau Bertoli (pictured) said the company had not finalised “a next-step decision so we are keeping our options open”.

“Supportive shareholders will be deciding what is the best possible price,” he said.

His partner Greg Moshal said the company received a letter from ASIC a day before the float as part of a broader review of lending contract terms the regulator is conducting.

“Look, we had to play the hand that we were dealt,” Mr Moshal said.

“The nature of it, being contacted the day before, we did have to pause and engage and that is the prudent approach to take. It was a very tough decision.”