IPO hopeful Cuscal flips to back-end bookbuild amid market volatility

afr.com:

ASX aspirant Cuscal has locked in a back-end bookbuild process, bowing to investor concerns about having their funds locked away for several weeks amid increased market volatility, Street Talk understands.

Sources claimed the end-to-end payments outfit and the pricing of the mooted initial public offering had been well received by investor domestic and overseas investors following a whirlwind global tour. However, it is understood interested parties voiced concerns about the unfolding crisis in the Middle East and the front-end bookbuild which would see their funds held for three weeks.

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

A back-end process dramatically narrows the period between an investor’s allocation of funds and trading to a handful of days, transferring the risk to the company.

Cuscal’s advisers Bank of America have fixed the IPO price at $2.50 per share and are positioning the company as a defensive opportunity. This equates to a $367 million offer size (a primary issuance of $75 million and a selldown of $292 million) and a market capitalisation of $514 million.

The two-day bookbuild will be held on November 21 and November 22. Cuscal’s shares are expected to commence trading on the ASX on November 24. Cuscal has tapped Bell Potter and Ord Minnett as co-managers. Bank of America is sole lead manager.

Back-end bookbuilds are the global standard for IPOs and have been used by large Australian IPOs like Medibank Private and Aurizon. In simple terms, the process starts with lodging a prospectus, issuing a price range, running a roadshow, kicking off the retail offer, completing the bookbuild and listing within a few days. The last company to employ this process wasGQG