Afterpay to stage $800m raising, co-founders sell-down 4m shares

Afterpay ASX APT capital raising sell down BNPL
Afterpay's co-founders Anthony Eisen and Nicholas Molnar will each sell a 10% stake in the company as part of the $800 million capital raising.

Buy now pay later company Afterpay (ASX: APT) has announced it will stage an $800 million capital raising as it looks to maintain sales growth in online shopping and expand into new markets.

The e-commerce provider will split the raising into a $650 million institutional placement followed by a $150 million share purchase plan to eligible shareholders.

At the same time, Afterpay’s co-founders Anthony Eisen and Nicholas Molnar will each sell 2.05 million shares, representing 10% of their respective shareholding in the company.

The selldown represents approximately 1.5% of total shares outstanding in Afterpay and will leave the co-founders with around 18.4 million shares each.

It will be the second time in 12 months the duo has sold shares in the company and after the current sale, they will remain Afterpay’s largest shareholders.

They have agreed to not offload any further shares until after this year’s annual general meeting.

Global expansion

Mr Eisen, who is also the chief executive officer, said the capital raising would accelerate Afterpay’s investment in growing underlying sales and prioritising global expansion in the short-term to maximise shareholder value.

“Given the ongoing impacts from COVID-19 and the uncertain global economic conditions, we have continued to focus on preserving capital and maintaining a strong balance sheet,” he said.

“By raising capital today, we believe we will be in the strongest position possible to execute on our strategic initiatives and growth aspirations.”

Afterpay shares last week hit a record high of $70 amid a shift to online spending during coronavirus lockdowns worldwide and as the company has expanded into the key US market.

Growth trajectory

In its June corporate update, Afterpay said it had continued its growth trajectory for the fourth quarter and across the 2020 financial year as consumers shifted further towards online spending during the pandemic.

Underlying sales for the quarter increased by 127% from a year ago to $3.8 billion – making it the highest quarterly performance ever recorded by the company.

It also achieved a global active customer base of 9.9 million by year end (exceeding its 2020 target by 400,000) and added an average 20,500 new customers to its platform per day for the three months to June.

An increased focus on budgeting and a greater aversion to traditional credit products have “organically increased” the attractiveness of Afterpay’s “purposefully-differentiated” business model.

“The flexibility of our business model [has] allowed us to manage risk when we need to, and take advantage of positive customer sentiment and behaviours,” Mr Eisen said.

“Our ongoing investment in growing our retailer and customer bases, and global expansion objectives, will ensure we continue to deliver long term benefits to our shareholders.”

Sales revenue

Afterpay achieved $11.1 billion in underlying sales for the 12 months to June – up 112% on the previous corresponding period and providing confidence that it can achieve a $20 billion target by the end of the 2022 financial year.

Key to its ambitions will be investing in existing regions to maintain and grow market presence; expediting expansion into new markets; and creating flexibility and capacity to execute on potential merger and acquisition opportunities.

Mr Eisen said an expansion into Canada is on track for the start of 2021 and additional international markets have been identified.

At mid-afternoon, shares in Afterpay were steady at $68.

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