Consumer lending and investment business Plenti has boosted the value of its initial public offering (IPO) by $5 million ahead of a planned ASX float this month after capturing encouraging interest from potential investors.
According to its prospectus, the non-bank lender is now aiming to raise $55 million through the issue of 33.13 million shares at $1.66 each. This offer values the enterprise at $224.3 million and implies a market capitalisation of $280.3 million.
Plenti recently rebranded from the peer-to-peer lending company RateSetter and mainly offers car, solar panel and personal loans, which combined are believed to represent more than $45 billion of annual lending in Australia.
The company said the IPO is intended to provide it with capital to fund growth in the warehouse facility it established to fund secured automotive loans, as well as future growth of its loan book.
The IPO is being jointly marketed by lead managers Bell Potter and Wilsons with Plenti slated to begin trading on 23 September under the ticker code ‘PLT’.
Plenti’s business model
Plenti utilises digital technology to offer consumer loans in three core verticals: secured automotive loans for new or used vehicles up to a value of $100,000; unsecured loans for the purchase and installation of renewable energy equipment including solar panels and home batteries up to $80,000; and personal loans of up to $45,000 for a range of purposes including debt consolidation, home improvements and travel, medical or legal expenses.
The company funds loans from multiple platforms. Its Plenti lending platform is a registered managed investment scheme that facilitates investments as small as $10 (for personal and renewable energy loans), while its wholesale lending platform is an unregistered scheme available only to institutional investors, including banks.
The company also established a warehouse facility in December 2019 to fund unsecured automotive loans. Plenti said this facility is expected to provide the company with the “flexibility and funding scale to reach its medium-term ambitions in automotive finance”.
Plenti claims it has funded about $870 million in loans to more than 55,000 borrowers and has been backed by about 22,000 registered investors since launching in late 2014.
It said its points of difference are its digital accessibility, simple and transparent loan terms including no early repayment or exit fees, its highly automated, streamlined and rapid application assessments, and fast processing with funds typically settled on the same or next business day after the borrower has accepted their contract online.
In the chairman’s letter, Plenti chairman and non-executive director Mary Ploughman said the company currently has about $400 million of loans outstanding with strong credit performance being maintained (with credit losses being less than 1.75% of loans funded) even during the current COVID-19 pandemic.
Ms Ploughman said a key strength of the company’s business model is the diversity of its funding.
“Plenti commenced operations with a focus on retail investors, investing via a retail lending model but the company has deliberately diversified its funding base to include wholesale investors (including SMSFs, fixed income funds, several banks and an institutional superannuation fund) and the Federal Government’s Clean Energy Finance Corporation,” she wrote.
The recently established warehouse funding facility adds flexibility as the company plans its growth and different markets evolve, Ms Ploughman added.
According to its prospectus, Plenti aims to grow loan originations in each of its core lending verticals as well as expand into new lending and other financial services over time.
In particular, it plans to develop new features and launch new loan products, in addition to growing originations via a third-party introducer network.
Along with accelerated business growth, Plenti said its planned IPO and subsequent listing is expected to provide the company with an increased profile and brand awareness, and capital to fund growth of its loan book.
About $5.7 million of the IPO proceeds will be used to pay for the costs of the offer while the remaining $49.3 million has been allocated to “provide funding of warehouse equity tranches, general working capital and other”.