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Subprime lender Propel Holdings Inc. has filed documents to launch a $60-million initial public offering on the Toronto Stock Exchange.

Founded in 2011, Propel provides personal loans to U.S. customers in nearly 30 states. The Toronto-based company has originated more than US$500-million in loans through MoneyKey and CreditFresh, its public-facing brands. Its loans typically range from US$200 to US$3,500, serving clients with low credit scores, limited credit histories or volatile incomes, at higher interest rates than mainstream lenders.

Shares are expected to be priced between $9.25 and $9.75, according to a company prospectus. The company could raise $69-million in gross proceeds if an over-allotment option is exercised in full. Canaccord Genuity Corp. and Scotia Capital Inc. are the lead underwriters on the IPO.

The company plans to use the proceeds to launch in additional states, fund acquisitions, and expand its suite of financial products, including a program that graduates existing clients to loans with lower interest rates when they show a strong repayment history.

Propel has seen consistent growth in its revenue and profits. In 2020, it recorded US$7.3-million in net income on US$73-million in revenue, up from US$2-million in profit on US$68-million in revenue in 2019.

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The company is partnered with two regional banks in the U.S. and a non-bank financial institution. The prospectus said it receives 20,000 unique applications each day, some of which are processed in 10 seconds. Propel credits its underwriting algorithm, which “look[s] beyond traditional credit scores” to determine risk, with bringing its missed-payment rate down to 4.6 per cent as of June 30. The rate has decreased steadily since 2015.

If Propel raises $60-million, chief executive officer Clive Kinross and board chair Michael Stein will each own 19.1 per cent of the company’s shares. Mr. Kinross, who co-founded Propel, was president of Openlane, an online marketplace for used vehicles. He co-founded Openlane in 2000 with Mr. Stein, who in 1996 founded CAPREIT, a real estate investment trust that owns apartments across Canada.

After a roaring start to the year, Canada’s IPO market has calmed considerably in the past two months. While deal flow typically has a summer slowdown, recent stock market volatility has added uncertainty for investors, and already there are signs that it will be a struggle to sell some deals.

In mid-September, Canadian beauty products and cosmetics maker Knowlton Development Corporation Inc., also known as kdc/one, launched an US$800-million initial public offering with plans to be dual-listed on the New York Stock Exchange and the Toronto Stock Exchange, but pulled the deal a week later. The IPO had been in the works for months, but the company said it will remain private. Its backers include the Caisse de dépôt et placement du Québec.

With a report from Tim Kiladze

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