First New ASX Bank Listing in Three Decades - JDO
(02 November 2021 – Australia) Judo Bank (ASX: JDO) has listed on the Australian Stock Exchange (ASX) only six years after the concept for a small business (SMB) focused Neobank was floated by a frustrated former NAB executive.
Judo Bank gained a full banking licence from the Australian Prudential Regulatory Authority (APRA) in Q2 2019 and raised over A$1.5 billion in funding since its 2018 launch as Judo Capital. Shares in Judo Bank closed up 6.6 percent as investors sought a piece of the first Bank to list on the ASX in 25 years. The offer price of A$2.10 a share closed at A$2.26, with funds from the initial public offering (IPO) raising A$657 million.
Judo Bank CEO Joseph Healy stated that he thought Judo Bank would be best placed to list in 2023, but the strength of the growth in the business in the last year had brought forward the float. Mr Healy described the big banks’ alleged abandonment of the SME market as “market failure”. Judo commissioned East & Partners to conduct research released in September that found 48 percent of SMEs applied for credit in the past six months but around one quarter were knocked back. The major banks focused too much on real-estate-backed collateral and not enough on cash flow, balance sheet capital or the character of prospective borrowers, Mr Healy said.
A key feature of the group’s recent loan origination strength has been extending credit to SMBs supported by the Reserve Bank of Australia’s (RBA) Term Funding Facility (TFF). Judo Bank confirmed that the expiry of lending under the TFF in 2024 as a risk to the business however the Bank is already working to transition to new sources of funding.
“Banks are quite capital intensive business, we have now raised A$1.5 billion over the last few years but there comes a point that as you grow and you need to go back to the capital market it’s a lot easier to do that in the public market” Mr Healy said.
“It’s a to-die-for share register. At a personal level the idea of being acquired by a big bank has never appealed to me. We’ll switch into the deposit market back into the wholesale debt market and use the TFF for a very short period of time” he added.
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