Takeover offer made for Prospa

A consortium led by the Salter Brothers Tech Fund has launched a takeover scheme for small business lender Prospa Group backed by the latter's board that values Prospa at A$74 million.

Tuesday, February 27th 2024, 6:27PM

by Jenny Ruth

That's a fraction of the A$610 million valuation when Prospa listed on the ASX in 2019.

The offer is subject to a number of conditions, including the approval of Australia's Foreign Investment Review Board and of Prospa shareholders.

The offer is either 45 Australian cents per share or shares in a new unlisted public company named PGL Holdco, but holders of at least 74% of Prospa must elect the scrip option for the takeover to succeed.

The cash consideration will be partly funded by Prospa lending the consortium up to A$12 million and that will also require Prospa shareholders' approval – a meeting to approve this funding is planned to be held immediately before a meeting to vote on the scheme.

Prospa shares closed at 37.5 Australian cents on Monday. The shares peaked at A$5.09 in September 2019 but have traded below A$1 for more than a year.

The shares jumped as high as 43 cents on Tuesday before ending the day at 42.5 cents.

A committee of Prospa's independent directors, led by chair Gail Pemberton, has unanimously recommended the offer in the absence of a superior offer and as long as an independent expert concludes that the offer is in the best interests of Prospa's shareholders.

The committee of independent directors “believes that this transaction is in the best interests of Prospa shareholders,” Pemberton said, adding that the offer represents a 26% premium to Prospa's volume-weighted average price since its last earnings update.

Earlier today, Prospa reported an A$6 million first-half net profit compared with an A$5.5 million net loss in the previous first half.

The company said its total loan originations were down 27.4% at A$308.3 million in the six months from the previous first half with New Zealand originations down 32.3% at A$63 million.

“Lower originations reflect the deliberate tightening of credit settings,” the company said.

It said net bad debts “remained elevated” at A$53.7 million, down slightly from A$54 million a year earlier, and increased to 12.9% annualised of average gross loans from 12.5%.

Tags: Prospa