The Pepper Money Ltd (ASX: PPM) share price has struggled to give the kick its investors might be looking for after a flat debut on the ASX.
Its shares opened at $2.61 on Tuesday, its first day of listing and below its initial public offering price of $2.89. Its shares have failed to push higher on Wednesday, sliding 3.26% to $2.53 at the time of writing.
What does Pepper Money do?
Pepper Money is a little bit different to your atypical big four bank. The company isn’t licensed to accept deposits, but offers a broad range of loan and credit products.
Within the highly competitive lending landscape, Pepper Money targets underserved customer segments such as non-conforming borrowers that are unable to satisfy the criteria of the Major Australia Banks. Its prospectus highlights that the non-conforming market represents approximately 12% of the existing Australian residential home loan market as at December 2020.
The company currently offers three broad categories of products. This includes mortgages predominantly for residential home loans, asset finances primarily for used cars and, loan servicing for residential mortgages and personal loans.
The prospectus revealed that Pepper Money had a market share of ~0.5% of the $2,160 billion Australian and New Zealand mortgage market, and a market share of ~5.1% of the $52 billion Australian motor vehicle and equipment finance market.
The company has a solid track recovery of growth with a respective compound annual growth rate (CAGR) for asset under management, total operating income and net profit after tax of 10%, 35% and 82% respectively, between CY2018 and CY2020.
In CY2020, the company delivered a net interest income of $352.2 million with net profit from continuing operations sitting at $106.3 million. The prospectus forecasts a flat CY21 net interest income of $356.3 million and a 13.5% increase in net profits to $120.7 million.
The Pepper Money share price falls flat
Despite Pepper Money’s unique take on growing its business and solid track record, its shares have struggled to make headway in its first two days on the ASX.
The Pepper Money share price isn’t the only recent finance IPO to fall flat, with Latitude Financial Services Group Ltd (ASX: LFS) also sliding from $2.70 on its first day of listing on 20 April to $2.41 at the time of writing.