Tue. Oct 19th, 2021

It has been a hot market for initial public offerings (IPOs) during the first half of 2021, with the stock market activity being the highest in the last ten years.

While many of these listings have been found in the mining space, as they usually do in Australia, another area with several new listings is the non-bank lending sector. Some of these own brands like it Pepper Money (PPM) i Latitude (LFS). Still, they are a couple of smaller non-bank lenders that have caught Forager’s eye.

When it comes to sophisticated sellers, such as privately held companies, their goal is for companies to look good for sale in order to maximize the price of their IPO.

They take advantage of the information that investors who buy do not have access to and optimize the timing of the listing.

However, sometimes a stock market does not go flat and the stock price may start heading south shortly after the listing. It may be the case that they have had some kind of problem in the short term or that they have had a price that is too aggressive.

Although Forager does not participate in many IPOs at the time it happens, we tend to wait and lie, especially when there are long-term tailwinds and a good structural history.

Adore Beauty (ABY), for example, is one of them.

They adore below their IPO, and while there have been some initial problems, the underlying structure of the business’s long-term trajectory in revenue growth is solid.

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