Cuscal puts the brakes on $514m float; IPO deferred

afr.com:

Payments infrastructure business Cuscal, which was vying to be 2023’s second-biggest IPO after Redox, has deferred its run at the ASX boards.

Cuscal connects 87 small banks, non-banks and fintechs to the payments system. 

Street Talk understands Cuscal’s lead manager, Bank of America, informed investors of the decision on Wednesday, citing market conditions.

It comes after Cuscal met fund managers in London, Hong Kong, Singapore, Sydney and Melbourne to build support for the listing. Cuscal was pitched as the biggest player in end-to-end payments outside the big four banks, with client contracts spanning decades.

It was seeking to raise between $367 million and $378.4 million, which would have given it a $514 million market capitalisation at the upper end of the range. A big chunk of the proceeds – nearly $292 million – were earmarked to pay out Cuscal’s existing investors.

Fund managers were initially asked to bid for shares at $2.50 to $2.60. That implied an indicative enterprise valuation between 9.4 times and 9.7 times this financial year’s pro forma adjusted EBITDA. Local fund managers were told to think of Cuscal as a safer bet than the likes of Tyro Payments, while offshore investors were asked to use S&P 500 constituent Jack Henry as a listed comparable.

At the end of October, BofA fixed the pricing at $2.50 a share, and switched to a two-day bookbuild, which was to take place on November 21 and November 22.

Cuscal’s decision to defer its listing shows the IPO window is far from open. This year brought plenty of news on decent-sized companies mandating banks for their listings, but only one’s pulled the trigger on a float.

This year’s biggest listing, family-owned chemicals distributor Redox, has struggled to