Following $61 million TSX IPO, Propel Holdings eyes US expansion

Toronto-based FinTech startup Propel Holdings closed its IPO on the Toronto Stock Exchange, raising $61 million. The shares began trading on October 20 under the symbol PRL.

“The completion of this Offering marks a major milestone in Propel’s journey to become a leading, global fintech platform, and is the result of the commitment and passion of our incredible team,” said Clive Kinross, co-founder and CEO of Propel.

Propel co-founder and CEO Clive Kinross called the offering “a major milestone in Propel’s journey to become a leading, global fintech platform.”

“With this listing, we are entering our next chapter in a strong position for continued growth and remain as dedicated as ever to our consumers and in our belief that every individual deserves access to credit,” Kinross said.

Besides strengthening Propel’s financial position, the startup plans to use the proceeds from the IPO to pursue its growth strategies, including scaling up its products, and expansion into four to eight states in the United States.

Founded in 2011, Propel uses a proprietary AI-powered online lending platform to help consumers access credit.

A syndicate of underwriters led by Canaccord Genuity and Scotiabank made the offering, along with Raymond James, TD Securities, INFOR Financial, Roth Canada, and Stifel Nicolaus Canada.

The company could raise an additional gross proceeds of $9.1 million if the over-allotment option of 937,500 common shares at $9.75 a share is exercised. The underwriters can exercise the over-allotment in whole or part for a period of 30 days from the closing date of the offering.

In the final prospectus for the IPO, the 330-person company said it intends to go after acquisitions. “We are regularly assessing potential acquisition opportunities that would assist in expanding our geographic footprint and/or add new products to our portfolio,” the company stated.

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Propel successfully completed a $15 million preferred Series B round led by the Raptor Group in June.

The FinTech startup already operates in 28 US states and positions itself as “committed to credit inclusion, and helping underserved customers by providing fair, fast, and transparent access to credit.”

Propel has invested over $12 million into its proprietary platform, which is maintained by a 30-person team in Toronto, according to the prospectus.

The startup said that over the past eight years its technology platform has been integrated with more than 50 third-party data platforms, including bank and marketing partners, underwriting data sources, and payment processors.

For the six months ending in June, Propel’s platform processed on average 20,000 unique applications per business day, 88 percent of which received a fully automated credit decision.

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The company said in its prospectus that its proprietary underwriting algorithms are embedded in its technology platform, which has a direct integration with more than 10 data providers. The latter include multiple credit reporting agencies and alternative underwriting data providers, and incorporates over 1,000 data points in rendering automated initial credit decisions.

“Our AI infrastructure is designed such that the more applications and loans we process, the better and more efficiently our platform operates,” the company wrote in the prospectus. “Propel also benefits from having accumulated almost 10 years of proprietary historical data from over 758,000 loans originated through the platform and millions of unique customers underwritten through our proprietary algorithms.”

The startup also claimed that its AI-powered underwriting procedures look past traditional credit scores to identify consumers with the ability and willingness to repay, while maintaining Propel’s target loss rates.

“We believe the powerful AI engine has been a significant factor in driving the overall missed payment rate down to less than 4.6 percent in the six months ending June 30, 2021 from over 10 percent in Fiscal 2018,” Propel noted.

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As at June 30, the FinTech startup had facilitated over 758,000 personal, unsecured loans and lines of credit through its platform, with approximately $515 million being advanced to over 492,000 unique customers. In fiscal 2020, revenue, operating income and net income were $73.5 million, $17.3 million and $7.3 million, respectively.

Propel generated $8 million of net income in the six-month period ended June 30.

The company was founded by Propel CEO Kinross. Shortly after, Noah Buchman, Sheldon Saidakovsky and Jonathan Goler joined the team as co-founders. The original shareholders invested $4 million of equity in the company.

In mid-2019, Propel closed on a $35 million credit facility with a group of lenders to provide the necessary debt capital for the growth of its CreditFresh brand. In December 2020, Propel increased the size of its CreditFresh debt facility from $35 million to $45 million.

Propel increased the CreditFresh debt facility to $120 million in March, adding additional debt capital partners.

Feature image from Propel via LinkedIn

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.