Judo Share Price & Media

Hi all,

Thought I'd kick off a new thread with these comments just out from the Fin Review this evening (emphasis in bold is mine, obviously).

Good luck to holders - first bank to list on the ASX in 25 years, will be interesting following the company from here. Hopefully a great time to list, with SME businesses looking to come back to life in a post-pandemic world.

Cheers,
mondy

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Judo kicks in first bank float in 25 years
Shares in Judo Bank rose by 7.6 per cent on their Australian sharemarket debut, catapulting the lender into ASX 200 contention after raising $657 million in an initial public offering that lashed the majors and promised to bring back the “craft of SME relationship banking”.The neobank, which has amassed a small business loan book worth $4.4 billion in five years, began trading on the Australian Securities Exchange on Monday after an IPO believed to be the year’s fourth biggest. From a debut price of $2.10, Judo shares jumped to $2.17 within the opening minutes of trading and continued climbing to close at $2.26, with a market capitalisation of $2.5 billion.That makes Judo the 162nd-largest public company in Australia and a likely candidate for admission to the S&P/ASX 200 index after proving its eligibility over the next two quarters.It is understood to be the first float of a licensed banking institution since Macquarie listed on the ASX in 1996.

ASX group executive of listings Max Cunningham said: “Judo’s arrival reinforces the strength of the current IPO market. ASX welcomes a disrupter like Judo to the financial services sector.”Judo chief executive Joseph Healy, whose shareholding is now worth about $73 million, said the IPO and post-float reception from investors was an endorsement of his strategy to chart a course between digital-only challengers and the old-school big four.“This is a unique banking business model, there’s nothing in the market that is comparable to it,” Mr Healy told The Australian Financial Review when asked to echo his IPO pitch to institutional investors.“We don’t call ourselves a fintech. We’re not defined by technology. But we are undoubtedly enabled by technology.”Judo employs more than 300 people, all of whom have equity in the company. Mr Healy said his top priority after listing was to maintain the “founder-led” mentality of the business as it grows.It was founded after the Scottish-born former National Australia Bank and Citi executive came to the conclusion that most bankers had “de-skilled” and lost the ability to scrutinise small business balance sheets and apply “judgment, not formula”.Mr Healy described the big banks’ alleged abandonment of the SME market as “market failure”. Research commissioned by Judo and released in September found 48 per cent of SMEs applied for credit in the past six months but around one quarter were knocked back.The major banks focused too much on real-estate-backed collateral and not enough on cash flow, balance sheet capital or the character of prospective borrowers, Mr Healy said.

That was an opportunity for Judo, which told investors it hoped to turn a profit and hit a loan book milestone of $6 billion this financial year. Over the next five years, that goal would increase to $20 billion, Mr Healy said – but even that was still a rounding error, he added, given the SME lending market was worth about $600 billion.“We don’t spend any time thinking about what the big banks are doing,” he said.But while Mr Healy claimed to be unfazed by the big incumbents which he said were too risk-averse and burdened by “legacy”, he admitted Judo was closely watching another sleeping economic giant: inflation.“We’re expecting a very strong 2022,” he said. “The issues are the inflationary pressures on the economy and the real prospect of a rising interest rate environment.“That’s an opportunity for us because almost all of our lending is variable rate lending and we could pass through higher costs [to customers]. But obviously, we’re conscious that we don’t live in isolation of the economy.”

Rising consumer prices would hit the household sector, which in turn would place pressure on SMEs, he said. Judo’s bankers are adding a 2 per cent buffer when assessing a customer’s ability to make repayments.“Clearly, there are inflationary pressures in the system,” Mr Healy said. “We are well advanced in our thinking about the risks and the impact of higher levels of inflation and interest rates.”