Pepper Money gets closer to IPO

KKR – the investment group that bought Pepper Money for $657 million back in 2017, has announced yet another move towards listing the Australian and New Zealand lender.

With Credit Suisse, Goldman Sachs and RBC Capital Markets already onboard the float as lead managers, the buyout fund is taking pitches from other potential advisors for the float.

The latest news, however, seems to follow a regular pattern as KKR tries to whip up interest in the market.  One month ago, almost to the day, news broke that KKR was getting closer to an IPO for Pepper.

This is not Pepper’s first rodeo, as the company has listed on the ASX before. When it initially listed in 2015 it had a market capitalization of $470 million – which jumped to $600 million on the first day of trading. When KKR bought Pepper in 2017 it delisted the non-bank lender.

In January 2020, KKR and Pepper planned to float the business again, valuing the company at around $1 billion. Market conditions and the global pandemic put paid to those plans, but a resurgent stock market seems to have whetted the giant investment group’s appetite.

In the firm’s latest pitch to fund managers, it described itself as a leading player in the non-bank sector with $15 billion assets at the end of last year, having originated $3.4 billion in home loans and $1.2 billion in car and caravan loans through 5,380 brokers during the year.

Pepper’s home loans in a nutshell:

 

Prime                   

59%

Near prime        

34%

Specialist            

7%

Who sells Pepper’s mortgages?

 

Aggregators       

55%

White label        

40%

Direct                   

5%

Advisors on the IPO (so far)

Credit Suisse

Goldman Sachs

RBC Capital Markets

Reunion Capital Partners

Gilbert + Tobin

If successful, the new IPO is expected to raise around $500 million. Back in the 2017 buyout, Grant Samuel valued Pepper ANZ at 10.5 to 11.5 times profit.