Scottish Pacific is one of the biggest lenders to sellers of consumer electronic products and appliances in Australia along with the retail channel, with Affinity Equity Partners looking to exit the business as concerns mount about the retail industry and slowing sales.

Affinity Equity Partners is understood to be reconsidering its exit strategy for Scottish Pacific after an initial move to find a buyer failed to deliver interest.

According to the AFR here is now talk that the owner may pivot to an initial public offering.

For decades Scottish Pacific has been the go to financier of small distributors in Australia with the Company believed to have up to 70% of the stock factoring market.

Today debtor finance represents over 95% of the Companies loan exposure.

In the past Scottish Pacific once held more than 50% of the invoice discounting/factoring market under founder Clive Isenberg in the late 1990s, though that is historical and no longer reflects today’s market.

Their loan book now around A$3 billion with annual pre-tax earnings of over A$100 million

Their customer base tripled after Affinity Equity acquired the company in 2018 with the Company offering invoice finance, trade finance, SME supply-chain funding and distributor working-capital finance.

Affinity recently opened a data room for the business via UBS, with roughly a dozen parties – split broadly between private equity firms and strategic buyers – examining the asset.

Price expectations had already been wound back from earlier ambitions of $1.5bn to something closer to $1bn.

The understanding was that at least one offer came in at around eight times its earnings before interest, tax, depreciation and amortisation from a party – thought to be a special situation fund.

But that was not thought to be close to the seller’s price expectations.

Previously listed on the ASX in 2016 with a market value of $440m before Affinity privatised it in 2018 for $630m banks are now looking for a dual-track mandate that would include a potential float alongside the sale process, with Goldman Sachs understood to be involved claims the AFR.

Affinity is understood to have paid roughly 19 times profit when it acquired the business – a multiple that looks difficult to replicate in the current market.