Prospa Accepts Takeover Offer, Set to Delist from ASX

Highlights:

• Prospa, a small business lender, has agreed to a takeover offer led by the Salter Brothers Tech Fund consortium.
• The takeover offer values Prospa at $72 million, representing a 22% premium over its Monday closing price.
• Shareholders will have the option to receive either cash or equity in a new unlisted holding company, with co-founders Greg Moshal and Beau Bertoli retaining their positions within the company.

Introduction

Prospa, (ASX: PGL) a prominent small business lender, has decided to delist from the Australian Securities Exchange following a takeover offer. The move marks the end of a tumultuous period for the fintech company since its listing in 2019, as it struggled to regain investor confidence amid challenges exacerbated by the pandemic.

Takeover Offer Accepted

Prospa's board has accepted a takeover offer led by the Salter Brothers Tech Fund consortium. The offer, priced at 45 cents per share, values Prospa at $72 million, representing a 22% premium over its Monday closing price. However, it stands in stark contrast to the $3.78 per share at which Prospa initially listed in mid-2019, highlighting the company's downward trajectory since its failed listing attempt in 2018.

Board's Decision and Shareholder Options

Chairman Gail Pemberton stated that the board deemed the takeover deal to be in the best interest of shareholders. Shareholders will have the option to receive either cash or equity in a new unlisted holding company. Despite the delisting, co-founders Greg Moshal and Beau Bertoli are set to retain their positions within the company.

Financial Performance Challenges

Prospa faced significant challenges in its financial performance, reporting a 27.4% decrease in new loans originated and an adjusted EBITDA loss of $3.8 million for the half-year period. The company also experienced a decline in operating cash flow, compounded by tightened credit settings due to elevated arrears.

Market Response and Investor Implications

The takeover deal offers a potential exit for major shareholders like Airtree and Australian Super, who have witnessed their holdings depreciate since Prospa's listing. Airtree, for instance, saw its shares decrease in value by $30 million based on the difference between the float price and the Salter Fund's offer.

Conclusion

Prospa's decision to delist comes amidst a challenging period for the company, reflecting broader concerns about its financial viability and market performance. The takeover offer provides an opportunity for stakeholders to reassess their investments in light of Prospa's evolving trajectory and market dynamics.

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