Pepper Money announces IPO

• Initial Public Offering (IPO) to raise $500.1 million
• Pepper Money will have a market capitalisation of approximately A$1.3 billion¹ on listing
• Expected listing on ASX and trading of Shares initially on a conditional and deferred settlement basis on Tuesday 25 May 2021²

Pepper Money Limited (Pepper Money or the Company) today announced that it has lodged with the Australian Securities and Investments Commission its prospectus (Prospectus) for an initial public offering of new shares (Shares) at an offer price of $2.89 per share to raise $500.1million. The Company has also applied to be admitted on the official list of the Australian Securities Exchange (ASX).

Pepper Money Chairman Michael Culhane said, “The Board and I are delighted that investors will have the opportunity to become fellow shareholders in Pepper Money. Since writing its first loan in 2001, Pepper Money has originated over $32.3³ billion of loans in Australia and New Zealand.

“Pepper Money has invested strongly to build a scaled platform that benefits from a rich history of loans written or managed over the past 20+ years. Data-driven insights are central to what sets Pepper Money apart from our peers and has enabled us to assist more than 220,000 customers⁴.

“Our purpose is to help people succeed - we focus on underserved customer segments, via our multi-channel distribution platform and cascading credit model.”

Funds raised by the IPO will provide financial flexibility to pursue further growth opportunities and strengthen Pepper Money’s balance sheet by enabling the partial repayment of an existing bridge facility and shareholder loan.

“Pepper Money was founded in 2000 to provide innovative home loan solutions to customers that were underserved by traditional lenders. Since then, we have broadened our product set into asset financing, commercial real estate lending and personal loans as well as expanding our geographical footprint into New Zealand. We have consistently invested into our people, distribution partners, customer solutions and technology platforms. Further, we have leveraged market research, customer insights and through our experience and expertise have been at the forefront of product innovation. We have a solid performance track record and are eager to prosecute the significant opportunity we have to continue to grow the business.” Pepper Money CEO Mario Rehayem

About Pepper Money

Pepper Money is one of Australia and New Zealand’s leading non-bank lenders. It was established in 2000 and commenced lending as a specialist residential home loan lender in the Australian market in March 2001, with a focus on providing innovative home loan solutions to customers that were being underserved by traditional lenders.

Over time, Pepper Money has broadened its product offering from residential home loans in Australia, to Asset Finance in 2014, residential home loans in New Zealand and commercial real estate loans in Australia in 2019, and novated leases in 2020.  In recent years the Company has increasingly been offering higher credit quality home loans, launching its Near Prime residential mortgage product in 2012, and its Prime offering in 2014.

With a market share of approximately 0.5%⁵ of the $2,160 billion Australian and New Zealand mortgage market and an approximate 5.1%⁶ share of the $52 billion Australian motor vehicle and equipment finance market, Pepper Money believes it has significant headroom to grow within its core markets. Key to its growth are its in-house, purpose built data analytics and technology capabilities which are designed to inform credit decisioning, convert more applications, and drive performance across its business.

Testament to the strength of the Pepper Money business model is its strong growth across key metrics, including compound annual growth in total operating income (net of losses and net profit after tax (NPAT) on a pro-forma basis of 35.4% and 81.5%, CY2020 on CY2018.

The Company’s growth strategy is based on building sustainable Assets Under Management (AUM) at an acceptable risk-adjusted return. Pepper Money is expecting to continue to grow in calendar year 2021, with total AUM forecast to increase 11.5% to $16.8 billion, total operating income (net of losses) forecast to increase to $332.7 million and NPAT (Pro Forma) forecast to increase 13.6% to $120.7 million.

The Offer

The Offer comprises:

• The Broker Firm Offer, which is open only to Australian resident investors who are not institutional investors and who receive a firm allocation of Shares from their Broker;
• The Institutional Offer, which consists of an invitation to bid for Shares made to institutional investors in Australia, and a number of other eligible jurisdictions;
• The Employee Gift Offer, which is open only to Eligible Employees.
• The Management Offer, which is being made to certain members of management as part of legacy arrangements; and
• The Priority Offer, which is open to selected investors as agreed between the Company and the Joint Lead Managers.

The Offer (with the exception of the Employee Gift Offer, the Management Offer and Shares issued to Pepper Group ANZ Holdco Limited) is fully underwritten by the Joint Lead Managers – Goldman Sachs, Credit Suisse and Royal Bank of Canada. No general public offer of Shares will be made available.

Key Dates