Openpay Group Limited

 
Openpay to Raise ~$50 million through IPO: Openpay Group Limited (Proposed ASX Code: OPY) provides a payment platform that facilitates seamless, secure and swift payments between Customers and Merchants. The Openpay platform allows Customers to make in-store and online purchases, and effectively split the payment for these purchases into multiple repayments over time, while attracting no interest.
 
Openpay generates revenue from fees charged to both Merchants and Customers in exchange for the use of its payment platform. The Merchant fee is derived from transactions executed through the Openpay platform and represents a percentage of the Transaction Value of the good or service. During FY19, Merchant fees represented 51.8% of Openpay’s total revenue and 5.9% of FY19 Total Transaction Value. The business charges customer fees in the form of an ongoing plan management fee included with each repayment of the customers, while in some cases, an initial plan establishment fee or redraw fee for higher value plans may be paid. During FY19, customer fees contributed 48.2% of Openpay’s total revenue and represented 5.4% of FY19 Total Transaction Value.
 
IPO Details: The company announced an initial public offering of 31.25 million shares with an offer price of A$1.60 per share to raise approximately A$50.0 million.
 
Key offer Dates: Retail Offer opening date and closing date will be on 2 December 2019 and 12 December 2019, respectively. Trading on ASX is expected to commence on 19 December 2019.
 

Offer Statistics (Source: Company Reports)
 
Purpose of the Offer: The Offer is being conducted to support Openpay’s growth strategies, including investment in enhancing the company’s addressable market through product development, talent acquisition and expansion in the United Kingdom. The IPO is also aimed at the continued enhancement of its technology platform and decisioning engine along with growth  in receivables through increased access to equity funding. Other underlying purposes include working capital requirements of the business, access to listed capital markets for future growth, liquidity for the company’s shares and an opportunity for investors to invest in Openpay’s shares and benefits of an increased brand profile that arises from being a listed entity.

Past-Performance Highlights: Openpay has delivered strong growth across the key operating and financial metrics, showing considerable momentum in the business. As at 30 June 2019, the company reported 1,510 active merchants and 133,556 active customers on its platform. Since 30 June 2017, both active merchants and active customer numbers have witnessed a CAGR growth of ~99% and ~83%, respectively. Total Transaction Value reported 88% CAGR over the same period and loan receivables witnessed a CAGR of 92%. The business reported a CAGR of 112% in Active Plans. The above growth illustrates an increasing propensity for Customers to utilise multiple Openpay plans over time.


Performance Metrics (Source: Company Reports)

What to Expect: The Management has highlighted the strong future growth opportunities for the business on the backdrop of the growing local market, geographic expansion and new platform offerings. Openpay intends to retain its existing networks of merchants and customers and is looking forward to attract new Merchants and Customers to build upon its competitive market position across key verticals like automotive, healthcare and home improvement. It strategy aims to capture a larger share of the Australian retail market. The company aims to expand its presence in United Kingdom by continuing to onboard new Merchants and executing on its strong pipeline of leading retail brands. Openpay is also looking to strengthen its position in New Zealand. Openpay will leverage its platform to expand into new household spend verticals and other adjacent market opportunities, including developing a B2B payments solution with a capital light SaaS model.

Looking at the above growth strategy, we suggest investors to keep an eye on how the company delivers on its growth plans to provide returns to stakeholders, once it goes public.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.