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One of America’s biggest payday lenders is launching on the stock market with a $620m valuation, cashing in on mounting hopes that the Trump administration and Republicans in Congress will ease regulatory restrictions on the sector.
Shares in the private equity-backed company were priced on Wednesday evening at $14 per share, according to Bloomberg data. That values a combined 45 per cent stake held by three childhood friends who founded the business 20 years ago at about $280m, based on figures in its prospectus.
The listing comes at a crucial juncture for such companies, which consumer advocates attack as exploitative but whose backers argue provide a much-needed source of funds for workers who would otherwise struggle to borrow.
The Consumer Financial Protection Bureau had been planning a crackdown under its Obama-appointed head Richard Cordray, who maintained the industry stung consumers with unreasonably high interest rates.
Among other requirements, lenders would need to assess whether prospective borrowers could afford the repayments before making the loans. Curo warned in its prospectus that if enacted the new rules were “likely to have a significant impact on us”.
However, the White House appointee Mick Mulvaney, an arch critic of Mr Cordray’s regulatory agenda, took charge of the agency last week. A group of Republicans in Congress is meanwhile hoping to kill the planned regulations using the Congressional Review Act.
With few other payday lenders traded on public markets — most are privately held — Curo will provide a gauge of how optimistic investors are that the CFPB’s plans will be scrapped, or at least delayed or watered down.
Based in Wichita, Kansas, the company charges consumers as much as $25 for every $100 they borrow. It lends online and also operates 405 outlets in the US and Canada, although it is closing its 13 UK branches.
Curo, backed by the private equity group Friedman Fleischer & Lowe, is raising $93m by selling a 15 per cent stake in the float. The shares were priced at the bottom of a targeted range of between $14 and $16 a share.
The business was founded by Doug Rippel, who is executive chairman, along with Mike McKnight and Chad Faulkner. It is run by Don Gayhardt, chief executive, who received a $2m pay package last year.
Curo generated $65m in net income from $829m of revenues in 2016, up from $18m in net income the previous year. It plans to use the proceeds to repay some of its debt.