After a long-awaited arrival, financial services company Latitude Financial Services Group Ltd (ASX: LFS) has made its ASX debut today.
It looks like the third time is a charm for the Melbourne-based digital payments provider. Following two prior unsuccessful attempts at going public in 2018 and 2019.
By the end of the session, the newly ASX-listed Latitude share price was $2.70, 3.85% higher. Although the shares were trading 15% higher earlier.
ASX’s newly minted member… Latitude
Latitude might be new to the ASX, but this company has a rooted history in finance. Originally, Latitude formed the personal and vehicle finance operations of the Australian Guarantee Corporation. This went on to be owned by Westpac in 1988. The business proceeded to be acquired by GE Capital in 2002, before being sold to a consortium of private investors in 2015.
Over recent years, the company has undergone a refresh to be more relevant with the booming buy now, pay later (BNPL) trend. In response, Latitude launched its aptly named ‘LatitudePay’ — an interest-free product involving 10 weekly interest-free repayments. However, Latitude’s foundations are in its personal loans, vehicle loans, credit cards, and insurance products.
In fact, Latitude is Australia’s third-largest unsecured personal lender, providing its products to its 2.8 million customers and over 3,400 retail partners. Retail partners that include the likes of, now fellow ASX peers, JB Hi-Fi Limited (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN), and Wesfarmers Ltd (ASX: WES) owned Catch of the Day.
Waging war on a growing market
Following the interest-free wave, retail spending shifted away from traditional interest-accruing credit. This led to late 2018 appointed CEO Ahmed Fahour launching a new strategy. Spearheaded by a focus on growing its lending and instalments business.
However, Fahour is unashamed to say that instalments are a form of credit. In an interview with The Australian Financial Review, Mr. Fahour commented:
We are helping consumers with budgeting, there’s no question about it. We’re helping merchants with their marketing, no question about that as well. But it is credit at the end of the day, and an appropriate level of credit assessment or verification is required.
These words are quite contrary to other BNPL companies. Interestingly, Latitude rejected 650,000 potential customers of the million that applied last year. Meanwhile, Afterpay Ltd (ASX: APT) today announced it increased customers by 6.2 million in the last year. Along with its plans of a US listing.
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Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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