How these IPOs fared 1 week later

The first week of a company being on the ASX boards can be very telling. The market doesn’t get any new information until the next quarterly or half-year result, so we can get a sense of the market sentiment from how the share does in its first week.

Of course, how the market treats a share doesn’t ultimately mean anything. But, it can be interesting nonetheless.

Here are how the latest ASX shares fared:

Prospa Group Limited (ASX: PGL)

The only share that was scheduled to list last week was Prospa Group.

Prospa Group claims to be Australia’s number one online lender to small businesses, with its key selling point being that it can deliver fast finance solutions.

The company offers business loans of between $5,000 to $250,000. No security is needed to access up to $100,000. According to Prospa, the application takes just 10 minutes, you can get same day approval and funding is possible in 24 hours. It looks at the health of the business to determine credit worthiness.

If you’re a keen follower of financial news you will have seen that the Prospa float was pulled 15 minutes before it was due to start trading.

Apparently ASIC sent a letter to Prospa last Tuesday, it is speculated by those in-the-know that its standard form contracts allegedly contain unfair clauses in breach of consumer laws. However, ASIC didn’t make a request for the float to be delayed, nor raise concerns about the prospectus.

The company is looking at a revised schedule and will communicate to investors at the appropriate time, but at the time it was decided it was in the best interests of the company and new investors to delay the IPO.

Foolish takeaway

Some commentators have said that even though the interest rates offered by Prospa may seem high, of apparently above 40%, it’s better to go through a regulated business like Prospa than go to lenders who collect debts with baseball bats.

I imagine we will see Prospa try to list again sometime in the future. However, in my initial article I said I wouldn’t invest in Prospa and that remains the case.

Instead, I’d much rather invest in less-risky stocks like these exciting choices.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ASX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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