BofA kicks off $531m Cuscal IPO bookbuild; pricing out
It’s off to the races for Cuscal, the end-to-end payments outfit that’s shaping up to be 2023’s second-biggest IPO after Redox.
Cuscal connects 87 small banks, non-banks and fintechs to the payments system.
Street Talk understands the company’s sole lead manager, Bank of America, opened the institutional bookbuild on Friday after settling on indicative pricing.
The range was set at $2.50 to $2.60 a share, which equated to an offer size of $336.7 million to $378.4 million. This gives Cuscal a potential market cap of $513.9 million to $531.4 million – a size that could put it at the tail end of the small caps S&P/ASX300 universe, although that’s a matter for the index provider.
BofA is aiming to have its bookbuild finalised by November 3, according to communications sent to investors. The bank is understood to be seeking indications from global funds after meeting with prospective investors in New Zealand, London, Singapore and Hong Kong.
The bookbuild comes days after BofA’s research valued Cuscal at $564 million to $736 million. That would have been 18.1-times to 23.6-times the estimated pro forma earnings for the 2024 financial year. Investor marketing has positioned Cuscal as an alternative to major banks in the payments sector, positioned for growth.
“Valuations are supported by an outlook for profit growth, strong free cash conversion and a history of fully franked dividends,” the report said.
Cuscal was created in 1990 by member organisations including Australia’s largest credit union CUA, and is owned by MasterCard, Bendigo and Adelaide Bank and most of the big credit unions. The business offers payments infrastructure for a range of needs including cards and real-time payments, serving banks, credit unions and fintechs.
It has 87 customers, including Bendigo and Adelaide Bank, Rabobank, ING, Great Southern Bank and Regional Australia Bank.
Cuscal reported a $26.1 million net profit for the year ending June 30, up 12 per cent in the year. Adjusted EBITDA rose 27 per cent to $45.6 million. Return on equity was 8.8 per cent, higher than the 7.4 per cent reported in the previous year.
Shares are expected to commence trading on the ASX on November 23 – in a listing that would be closely watched by other ECM teams.
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out more