CAB Payments shareholders seek probe into IPO prospectus

(Sharecast News) - Shareholders in foreign exchange processing specialist CAB Payments were said to be urging regulatory authorities to investigate potentially misleading information in its initial public offering (IPO) prospectus on Monday. According to the Times, the IPO endorsed by JPMorgan and Barclays faced scrutiny after the FTSE 250 firm issued a profit warning just four months after floating.

CAB Payments debuted in London in July with a valuation of £851m, raising £335m in the City's most significant conventional IPO of the year at that point.

However, its market capitalisation has since plummeted to £173m, making it the worst-performing IPO globally this year, according to Bloomberg.

The Times said that among those raising concerns about the IPO's prospectus were investment funds RC Brown and Polar Capital, which count themselves among the top 20 shareholders in CAB Payments.

It said they alleged that the risks associated with CAB's operations in West African markets were not adequately disclosed.

"There has been more than an element of the advisers turning a blind eye to that," said RC Brown investment director Oliver Brown, referring to an alleged lack of disclosure around CAB's operations in 'parallel markets'.

"There's only so much you can put in a risk document, but the fact that they have been operating in a market where it appears other major competitors are not, these parallel markets that others would not touch, that is worthy of a risk disclosure."

Shares in CAB Payments tumbled almost three-quarters on 24 October after it slashed its revenue expectations due to central bank interventions in currencies such as the Nigerian naira and the Central African and West African francs, collectively contributing to about a third of its revenues.

That profit warning was issued five weeks after CAB reiterated its year-end guidance in its first-half results, the Times noted.

In its prospectus, CAB mentioned challenges related to the Central and West African franc twice, the Times reported.

"There is no guarantee that the growth experienced in these markets will be sustained", it said, adding that its results could be negatively impacted by significantly improved liquidity or other conditions in those markets.

It also noted that central banks "could in the future introduce measures to protect their currency and economy".

At 0858 GMT, shares in CAB Payments were up 2.05% at 69.6p.

Reporting by Josh White for Sharecast.com.