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IPO stands for initial public offering, under which a private company offers its new shares to the public in order to raise funds to satisfy its business requirements.
In this article, we will discuss three companies which recently made their debut on ASX. Let us have a broader look at these companies along with their IPO process.
Prospa Group Limited
About the Company:
Prospa Group Limited (ASX: PGL) is a financial technology company, which has been known to serve as an online lender to cater to small businesses. PGL provides business loans to a small firm in the range of $ 5,000 to $300,000, and there is no requirement of asset security to access the loan amounts of up to $ 100,000. The loan application process can be completed under 10 mins, and the borrower gets information related to the companyâs decision on the same day. Moreover, funds can be disbursed within 24 hours.
The company, through its smart proprietary technology platform, drives scale and efficiency, as well as improves decision making process related to credits. Since 2012, the company has lent more than $ 1 billion. The product offerings made by the company expanded from its first product of online business loan to line of credit facilities and B2B payments via Prospa Pay, which is the B2B payments solution of the company.
Figure below highlights growing number of small businesses in Australia, reflecting a huge opportunity for the company.
Companyâs Product Offerings:
The main offering of the company is an amortising term loan. The company had also made heavy investments in its three strategic pillars, namely technology, funding and distribution in order to develop a platform that is multi-channel, potentially product agnostic and capable of delivering the cash flow products as well as services which would support small businesses in growing.
Characteristics of Amortising Term Loan:
- Amortising term loan is a simple, online business loan.
- There is no requirement of any asset security to access funds up to $ 100,000
- Principal amount ranges from $ 5,000 to $ 300,000.
- The term is from a period of 3 months to 24 months.
- The price depends on credit quality, and the interest rate range from 9.9% to 26.5%.
- The client is charged with an origination fee for each new loan.
- Late fee is also applicable, in case there is a miss in the repayment.
- Automated direct debit instalments are made on a regular basis (daily, weekly and fortnightly).
Characteristics of Line of Credit:
- PGL offers a line of credit for business purposes, majorly related to working capital for unforeseen cash flow gaps as well as short-term requirements.
- The principal amount ranges from $2k to $25k.
- The term of the loan is for a period of 12 months with the provision of annual renewal.
- The credit line includes automated direct debit instalments of principal and interest, every week.
- There is also a provision to make the lump sum principal repayment at any point of time.
Prospa Group Limited, at present, is focused on the Australia as well as New Zealand based small business lending sectors, where financial solutions are provided by the industry participants to small businesses for managing cash flow and funding growth initiatives. PGLâs competitors include banks, non-bank lenders, and financial technology or online lenders.
ASX Debut:
On 11 June 2019, Prospa Group Limited made its debut on ASX. As per the prospectus of the company, it had expected to raise ~ $ 109.6 million by issuing around 29 million fully paid ordinary shares at an issue price of $ 3.78 per share.
Reason for IPO:
The offer was made by the company for supporting its growth strategies like improving and growing its term loan product for small businesses, boosting its addressable market, aiding working capital, getting access to listed capital markets for future growth, and giving few existing shareholders the opportunity to realise all or part of their investment in the company.
Stock Performance:
The shares of PGL have provided a decent return of 17.17% in the last one month. The shares of PGL opened flat at $ 4.300 on 26 July 2019 as compared to its previous closing price. There was a growth in the share price by 2.791% to $ 4.420 by the end of the trading session on 26 July 2019. PGL has a market cap of $ 693.81 million and ~ 161.35 million outstanding shares.
Quickfee Limited
About the Company:
Financial sector company, Quickfee Limited (ASX: QFE), was incorporated on February 15, 2018, with the completion of the acquisitions of QuickFee AU and QuickFee US; and with an aim to enter into the business of undertaking the core operations and providing the QuickFee Platform across Australia and the United States.
QuickFee AU was established in March 2009; and under this, the QuickFee Platform for Australian organizations was developed to enable them to accept monthly payment plans, under which customers get access to finance via QuickFee AU online to make payments. On the other hand, QuickFee US was incorporated in April 2016 after the encouraging interest that was noted for QuickFee AU in the Australian market.
Management:
- Barry Lewin, the Non-Executive Chairman of QFE and MBA, B.Com, LLB by qualification.
- Bruce Coombes, the Managing Director of QFE.
- Dale Smorgon, the Non-Executive Director of QFE and a graduate in commerce.
- James Drummond, the Chief Operating and Financial Officer of QFE and CPA by qualification
- Phillip Hains, Company Secretary, a chartered accountant and an MBA by qualification.
ASX Debut:
QFE made its ASX debut on 11 July 2019. It got admitted to the ASX official list on 9 July 2019. Through its IPO, the company was able to raise $ 13,500,000 as per the offer made under the prospectus by issuing 67,500,000 shares at an issue price of $ 0.20 per share.
Application of the proceeds:
The proceeds generated through the IPO would be used by the company to fund research & development, expenses of the offers and acquisitions, marketing & sales, financing of loans, in addition to debt repayment. Moreover, the funds would be directed towards the companyâs working capital needs.
Objectives Post-Listing
The objectives of the company post listing include
- Achieving scale as well as improving profitability through rapid firm acquisitions in addition to growth in book of loans.
- Creating brand awareness related to QuickFee Platform by boosting outbound marketing and sales efforts, keeping in mind increasing system sales and recurring revenue aggressively every month.
- Seizing leading position in the US market as well as booting its market share in Australia.
Stock Information:
The shares of QFE opened flat at $ 0.410 on 26 July 2019 as compared to its previous closing price. There was a fall in the share price by 4.878% to $ 0.390 by the end of the trading session on 26 July 2019. QFE has a market cap of $ 57.63 million and ~ 140.55 million outstanding shares.
VGI Partners Limited
About the Company:
VGI Partners Limited (ASX: VGI) is a global equity manager, engaged in the capital management for high net worth individuals, family offices as well as VGI Partners Global Investments Limited. VGI comprises of a team of 24 investment and operations professionals, who are based in the Australian city of Sydney, Japanese city of Tokyo and the US city of New York.
How does the company generate revenue?
The majority portion of the revenue of the company is generated in the form of management fees as well as performance fees, which are being charged on each of its funds. Both type of fees depends on the level of funds under management. Performance fee also depends on the investment performance of the funds.
Management fees are paid on a monthly basis and are generally equivalent to 1.5% of funds under management of each of VGI fund.
The company charges performance fees, which is equivalent to 15% of performance depending on a high water mark mechanism. The performance fee is calculated depending upon the performance of the fund during a specific span of time based on the investment management agreement.
ASX Debut:
VGI Partners Limited officially got listed on ASX on 21 June 2019. The company raised $ 75,000,000 as per the offer made under its replacement prospectus. Around 13,636,364 fully paid ordinary shares of the company were issued at an issue price of $ 5.50 per share.
Reason for Offer:
- To recognise as well as reward investors in the VGI Funds by offering them an option to apply for shares under the offer.
- To provide the company with an improved capital base.
- To broaden companyâs shareholder base
- To provide potential for non-cash compensation for existing as well as new employees of VGI via an equity incentive plan, which is yet to be adopted by the company in connection with the offer.
Stock Performance:
The shares of VGI have provided a return of 9.44% in the last one month. The shares of VGI opened flat at $ 12.410 on 26 July 2019 as compared to its previous closing price. There was a growth in the share price by 0.725% to $ 12.500 by the end of the trading session on 26 July 2019. VGI has a market cap of $ 832.31 million with ~ 67.07 million outstanding shares.
Disclaimer
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