DBK Deutsche Bank AG

By Robb M. Stewart

MELBOURNE, Australia--A consortium of investors including KKR & Co. have launched an initial public offering for Australian digital payments and lending platform Latitude Financial that could raise as much as 1.4 billion Australian dollars (US$945.1 million).

The planned float comes as Australia's incumbent financial-services providers face fresh competition in the wake of a damning year-long government ordered probe into misconduct, with the launch of several new digital-only banks, the rise of payment companies and "buy-now pay-later" services.

Latitude will offer more than 620 million new shares at between A$2 and A$2.25 each, raising A$1.24 billion-A$1.4 billion, according to the prospectus for the offer released Thursday. That would give Latitude a market value of between A$3.56 billion and A$4 billion.

Owners KKR, Varde Partners and Deutsche Bank AG are expected to retain an about 54% collective stake in the company and have agreed to hold on to their shares until at least a couple of days after Latitude releases its financial results for the year through June 2020.

In a letter accompanying the prospectus, Chairman Michael Tilley said the listing on the Australian Securities exchange would boost Latitude's financial flexibility and help its growth strategy.

About 70% of the IPO proceeds will be used to repay shareholder loans and 20% would be paid to the selling investors, the offer document said.

Melbourne-headquartered Latitude had gross loan receivables of A$7.7 billion as of end-June and has forecast 8.4% growth in its pro forma net profit to A$178.2 million in fiscal 2020, as net-interest income rises an estimated 3.2% to A$984.4 million.

The offer is being arranged and managed by Goldman Sachs Group Inc., Macquarie Capital and UBS Group AG. The shares will be offered to Australian and New Zealand clients of brokerages that are allocated stock, and through an institutional offer to professional investors. The final price for the offer is scheduled to be determined in mid-October and initial trading is set for Oct. 18.

With the float, stakes of 35% held by KKR and Varde will drop to just under 21% each, and Deutsche Bank's 30% holding will narrow to almost 13%.

Latitude said it has about 2.6 million customer accounts and 1,950 merchants across Australia and New Zealand, including electronics retailers Apple Inc. and JB Hi-Fi Ltd. The business was bought from General Electric Co. by KKR and its partners in 2015.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

September 26, 2019 00:41 ET (04:41 GMT)

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