Next Capital, which is a private equity firm, is tapping public markets for between $ 282 million and $ 312.8 million in the quest of a listing for the debtor finance business, Scottish Pacific. The deal is being financed by Goldman Sachs and Citi and has been priced at $ 3.20 per share. The books were opened to offshore investors earlier on 20 June 2016, along with instructions to bid upwards from the floor price in small increments. Domestic fund managers had time up till 21 June 2016 to submit orders. The stock is expected to make its debut on the stock exchange on July 15, 2016 on a deferred settlement basis. Ellerston Capital, Ausbil, Paradice Investment Management, Regal Funds Management and Northcape are said to be among the company’s new shareholders at the time of listing.
 
The company is now the biggest entity in the Australian debtor finance market and supplies working capital facilities to small and medium-sized enterprises. It has recently completed the acquisition of its competitor Bibby and this is expected to create future synergies. The small and medium enterprise market is currently under-serviced and the largest banks in the country say sources are reducing their exposure to a particular business sector. It is run by long-time chief executive Peter Langham and CFO Chris Hedge and can be compared to rivals such as Steadfast and Austbrokers, which also operate in the same segment and trade at price multiples of more than 14.3. The company is regarded as a leading provider of working capital requirements with a forecast annual net revenue growth of about 17% for the financial year to $ 109 million, and 43% net profit after tax and amortisation growth of $ 31 million.
 

Key Performance Indicators (Source: Company Prospectus)
 
Earlier, there was considerable debate among analysts about the price and whether the stock was overpriced. Interested investors have so far seemed to be upbeat about the prospects of the company. However, there is still some uncertainty about the price expectation, which is seen by some people as overoptimistic at the value that has been placed on the business. Analysts at Citi had earlier produced a valuation of between $ 455 million and $ 563 million, which equates a multiple of 14.5 times to 17.9 times the forecast annual net profit. Goldman Sachs raised a valuation of between $ 420 million, which produces a multiple of between 13.3 times and 16.3 times the forecast annual earnings. The more appropriate range of pricing is believed by some investors to be in the range of 12 times to 14 times.
 
The IPO has seen heavy demand from retail investors in the market and the expectation is that the strong support will be reflected by institutional investors while the business has a valuation of between 13.4 times and 15 times the forecast profit for the 2017 financial year. This should produce a market capitalisation of between $ 426.7 million and $ 476.6 million. Overall, potential investors have given a decent consideration and retail demand has been strong. Even, interests have been shown by investors from Asia and the United Kingdom.

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