Yeah, I just don't see the 41% interest being sustainable when...

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pikel1980

457 Posts.

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06/08/18

16:02

Post #: 34752396
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Originally posted by ValueTrader82 ↑

In fairness, I think the new reforms pushing for transparency, combined with the rampant growth of "me toos" like Get Capital, Moula, Capify... ( the list goes on) will have a double whammy downward effect on them and make it less attractive to IPO for 2 reasons:

1) When people see APR at circa 41% they will instantly look elsewhere, either forcing Prospa to drop their price or simply go even further down the credit tree

2) Their competitors are offering the same thing for 10-20% ... so growth will be hard without once again going further down the credit risk tree... meaning arrears will go from really bad to catastrophic

Listed comparables, that are bigger, growing just as far and make way more profit like AxsessToday - despite being more equipment finance focused, are trading at circa 10-15x 1 year forward PE - $150m Market Caps ... so I think Prospa's Bankers realised the writing was on the wall to the tune of listing something potentially 4x its market value and destroying their own reputation ... potentially cannibalizingany future deal flow they get for 12-18 months...

Over time, most of these new fintechs will follow suit of Wonga ... bad debts will consume them.

https://news.sky.com/story/10m-cash-call-rescues-payday-lender-wonga-from-insolvency-11460332

@Warnie @Christos12 what do you think?

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Yeah, I just don't see the 41% interest being sustainable when you trying to grow the business. I would argue that the end of the market that Prospa are seeking to capture are already saturated.

PGL Price at posting: $3.64 Sentiment: None Disclosure: Not Held
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