Latitude Financial Services, formerly known as GE Finance, is live on the ASX, following its long-anticipated IPO. It’s a case of third time lucky for Latitude. In 2018 and 2019, it pulled attempts to list.

Shares in Latitude were on offer at A$2.60 ($2.03) and opened at A$2.96 before dropping back to A$2.80. Specifically, the IPO raises A$150m, valuing Latitude at about A$2.6bn. Some 330 million shares form part of the flotation, leaving 66% with the original owners. That is, a combination of KKR, Värde Partners and Deutsche Bank, owners since 2015.

Latitude customer numbers are approaching 3 million and supports more than 2,000 merchant partners across Australia and New Zealand. Its product offerings include personal loans, credit cards and BNPL. And in the latter sector, it is competing in a crowded market.

Latitude IPO: crowded BNPL sector, volatile share prices

Take Laybuy for example. Its main markets are the UK, Australia and New Zealand. Its share price of A$0.92 is down by 37% since mid-February when it touched A$1.47.

Then there is Openpay. Its share price peaked last August at A$4.70. In 2021, the share price ranges from A$2.37 at the start of the year, to A$3.35 in February. The Openpay share price is currently back down to A$2.21.

Afterpay’s share price is just as volatile. Afterpay currently trades at A$126, down over 20% since touching A$160 in February.

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The Latitude IPO coincides with news that Afterpay is eyeing a possible listing in the US. Afterpay says that the US contributed over $1bn in underlying sales in a single month for the first time. Other Latitude BNPL rivals include Zippay, Sezzle and Splitit.

The Zippay share price, currently A$9.18, is down by 34% since mid-February.

It is a similar story at Sezzle. Its current share price of A$9.01 is down by 23% since 15 February.

At Splitit, its current share price of A$0.86 is down by 43% since 8 February.

Latitude IPO: Klarna and CBA

Afterpay, Zip, Latitude et al also face competition from the incumbent banks in the BNPL sector and from Klarna.

Sweden-headquartered Klarna launched its platform in Australia last January. And CBA is a major backer. Last January, CBA increased its original investment in Klarna of $100m to $300m, for a stake of 5.5%.

Just last week, the BNPL regulatory framework grabbed the headlines in Australia thanks to CBA’s CEO, Matt Comyn.

He told a House Standing Committee on Economics that the BNPL sector is now too big to avoid regulation. Moreover, he said that the BNPL players must be subject to the country’s comprehensive credit reporting regime.

CBA’s Comyn takes aim at BNPL rivals

Specifically, Comyn argues that BNPL users incur higher rates of arrears on credit facilities. But the BNPL providers do not contribute to comprehensive credit reporting, so the overall state of play is unclear. And crucially, he argues that BNPL operators issue credit products but rely on an exclusion in the regulations drafted before the sector existed.

Comyn is also on strong ground when he argues against the ‘no-surcharge’ rules imposed by some in the BNPL sector. This prevents merchants using the service from passing on costs incurred to customers.

One forecast is safe to make. That is that the BNPL sector will continue to attract a disproportionate amount of headlines relative to its overall percentage of the payments market for some time.