Prospa's ASX success boosts fintechs andalternative financiersBy...

Prospa's ASX success boosts fintechs andalternative financiers

By Clancy Yeates and Colin Kruger

June 11, 2019 — 12.38pm

Prospa Group's successful ASX debut on Tuesday,which came a year after its failed float, has given the whole fintech sector a boost, according to investors.

PM Capital portfolio manager Uday Cheruvu, saidProspa's float would send a positive signal to other fintech firms eyeing apotential listing on the sharemarket.

Greg Moshal and Beau Bertoli have delivered a stockmarket listing for small business lender Prospa Group.

"The valuation suggests there's a lot ofexcitement," said Mr Cheruvu. "People are putting a lot of emphasison the technology, but at the end of the day, it [Prospa] is a creditstory."

“It’s pretty exciting for Australian technology,it’s exciting for fintech,” co-founder Beau Bertoli said.

The company's founders, Greg Moshaland Beau Bartoli - who each sold $10 million worth of shares into the IPO -have emerged with stakes worth $111 million and $43 million respectively.

The successful float, the biggestfintech initial public offering (IPO) this year, was also seen as an importantstep for for the small business lending sector that is trying to establish itslegitimacy as an alternative to the big banks.

Prospa estimates there is about $20billion a year in demand for small business finance that was not being met bythe market.

“When we think about the size of theproblem of access to capital for small businesses, this is a massive problem.There’s well over $20 billion per annum, we believe, of funding that’s requiredto support Australia's small businesses.”

According to small business lendingconsultant and former NAB executive, Neil Slonim, the reputation of the smallbusiness lending sector rests heavily on Prospa's fortunes.

"It's a very important for thecredibility of the sector for Prospa to be successful," he said.

"Small business owners will bemore encouraged to seek finance from an alternative lender."

Aura Funds Management director BrettCraig said the float will open up some capital raising options for smallbusiness lenders.

“It shows there is a need out thereand capital markets are willing to support the sector,” he said.

Prospa shares debuted at $4.50, a 20per cent premium to its $3.78 initial public offering (IPO) price, and closed18 per cent higher at $4.46. This values the company at $720 million.

Prospa raised $110 million frominvestors ahead of the IPO, valuing the company at $610 million.

About $50 million raised from the IPOwent to current investors selling down their stakes, including the twofounders.

In its prospectus, Prospa said it wasforecasting double digit growth in revenues and loan originations for 2019.

"The board and executive teamexpect our strong performance to continue, with originations and revenueforecast to grow at 28 per cent and 26 per cent respectively in [this calendaryear]," Prospa chairman Gail Pemberton said.