IPO Watch - Latitude Financial (LAT)

An objective view of Latitude Financial's IPO, set to be one of the most heavily promoted IPOs of 2019.

Hugh Dive from Atlas Funds Management reviews the IPO's prospectus and explains why Atlas won't be bidding into the IPO.

Latitude Financial (LAT) is the rebranded GE Money which was acquired by the three PE partners in 2015 (KKR, Värde Partners and Deutsche Bank) for an undisclosed price. GE Money is a consumer finance business managing products such Myer credit cards, AGC car finance, own branded credit cards and point of sale finance at stores such as Harvey Norman, Apple and JB Hi-Fi.

LAT’s business model is relatively simple, LAT lends money to customers at a higher rate than they pay to borrow it on the wholesale markets, the profit is the margin between what LAT borrows and what it lends less the costs of doing business which includes unrecoverable loan losses.

LAT’s business has seen increased competition over the past 4 years from smaller more tech-savvy retail finance companies such as Afterpay (APT), ZipCo (Z1P), FlexiGroup (FXL) and Finance all competing for the same customer base,