Better IPO opportunities for Lending Companies this year
The IPO market has not been previously as accommodative as this year with regards to financial corporations specializing in offering loans to individuals. However, the stock exchange environment has softened its opinion on these firms and this, combined with government policies, has led to some companies going forward to test the public waters. One of these enterprises is Elevate Credit Inc., which will be coming back to try their hand on the New York Securities Exchange for the second time in two years.
Elevate Credit is an online lending company that targets customers from the United States and the United Kingdom. It markets itself on the fact that it offers low loan rates and provides services to clientele who might not be creditworthy to other financial institutions such as banks. The company’s Chief Executive Officer is Ken Rees while Jason Harvison functions as Elevate Credit’s Chief Operating Officer. Other positions within the firm’s executives are Chief Financial Officer who is currently Chris Lutes, Chief Communications Officer under Al Comeaux and Chief Marketing Officer – a position occupied by Greg Hall.
The money lender had previously filed for an IPO in 2015 and had scheduled that the issuance would take place in January 2016. However, it had to postpone its entry into the New York Securities Exchange as the company’s administration said that market conditions at the time were unfavorable. This time, the firm appears confident to go public and has set the terms for its offering. A price range of $12 – $14 per share has been set for the company’s stock. Additionally, it has set a revenue target of $107.8 million from the sale of 7.7 million shares.
The issuance’s lead underwriters include UBS Investment Bank, Credit Suisse, and Jefferies LLC. Additionally, this company’s release will be backed by Sequoia Capital and Technology Crossover Ventures, a pair of venture-capital firms. The company plans that $86 million from the issuance will go into repaying its debt from Victor Park Management LLC. Further, plans are yet to be fully elaborated.
In the past, the firm has received criticism over the fact that it targets lending money to clientele all for the purpose of making loan deductions on the customer’s payday, which would result in deep cuts in a client’s salary. However, Elevate Credit waved down these claims by explaining in its prospectus that those who have received a loan have the option to repay it over a range of time. Additionally, it has cited that it offers very competitive interest rates as compared to other lenders. The company reported that it sets its rates at a maximum of 255 percent, unlike other payday lenders who usually set maximum rates of 400 percent.
The company raised a revenue of $580.4 million in the previous financial year. This figure was an increase by $139.6 million from its 2015 revenue of $434 million. However, net losses increased from 2015 to 2016, with the most recent financial year recording losses totaling to $22.4 million.
However, 2017 may be a better year for this lender owing to the United States targeting lower interest rates this year. As such, this company’s rates would lower even further making it all the more competitive in the financial world. The clientele it serves would then increase, leading to the company’s profitability in the long-term.