Basper issues supplementary capital raising prospectus

Basper Ltd, which is raising funds to acquire DirectMoney, issued a supplementary prospectus on Friday, providing more detail on matters queried by the Australian Securities and Investments Commission.

ASIC requested that DirectMoney financial statements for the six months to December be audited. It also wanted a more detailed breakdown of DirectMoney's loan book and a more thorough explanation of its business model.

Interest in the loan book was prompted by DirectMoney's previous disclosure that between October and December last year it wrote off A$392,971 worth of bad debts, which were the result of an attack by a ring of fraudulent loan applicants using forgeries of bank statements and identity documents.

According to the supplementary prospectus, DirectMoney subsequently implemented anti-fraud measures, including photo ID and independent employer checks. The lender has not experienced any loss due to fraud since.

The loan balance at May 31 was $5.2 million. In April and May new loans were $50,000 and $17,000. The company said this reflected a lack of funding in the loan warehouse.

Of 58 loan contracts tested by investigating accountant BDO, four had missed two or more monthly payments. Of loan book outstandings at May 31, accounts totaling $790,428 had two or more instalments outstanding.

DirectMoney has clarified the description of its business model, which it calls "marketplace lending".

The supplementary prospectus says: "As a marketplace lender, as opposed to a peer to peer lender, the personal loans acquired by the loan investors are pooled, rather than acquired as individual loans."

DirectMoney said it was not a "pure intermediary". As the originator of the loans, which are held for a period before being on-sold, it carries the risk and reward of the loans until they are sold to investors.