Alceon buys stake in peer-to-peer marketplace lender DirectMoney

Alceon DirectMoney ASX DM1 Wisr WZR peer lending

Investment vehicle Alceon has made a play to acquire A$600,000 worth of shares in peer-to-peer marketplace lender DirectMoney (ASX: DM1), which is soon to become Wisr (ASX: WZR) after an official vote at the upcoming extraordinary general meeting.

Alceon is buying more than 14 million DirectMoney shares at A$0.042 each – a 56% premium to DirectMoney’s closing price on Friday 9 February of A$0.027. The purchase will give Alceon a 3.1% stake in DirectMoney.

DirectMoney chief executive officer Anthony Nantes said the funds from the placement will go towards growing the company’s personal loan business.

“As we enter a period of strong growth, having support and guidance from a strategic investor like Alceon will be invaluable for the company,” Mr Nantes added.

DirectMoney commissioned Research as a Service to compile an analyst report on its current and forecast activities.

The report published on 5 February has given DirectMoney a valuation of around A$60 million – equating to about A$0.14 per share.

DirectMoney has developed a platform that connects borrowers and investors in the “rapidly growing” lending marketplace within Australia.

The company provides secured and unsecured personal loans to Australian consumers which have three and five-year maturity time-periods.

The loans contain fixed repayments over the term and do not charge consumers with early repayment or exit fees and are onsold to retail, institutional and wholesale investors.

Additionally, borrowers with good credit histories are able to access lower interest rates.

According to DirectMoney, since 2015, investors have received a net return of 7.4% per annum. Investors are buffered from the impact of a defaulted borrower by having their loan portfolio diversified across DirectMoney’s entire loan suite. The company also offers downside protection using multiple processes.

Research as a service has forecast DirectMoney will generate A$1.9 million in revenue during the 2018 financial year and post an operating loss of A$4.8 million.

The analyst predicts that company will break even by the end of 2019 and become profitable in the 2020 financial year.

During the 2017 financial year, DirectMoney posted a net A$5.4 million loss, but gave the reason of deliberately slowed loan book growth while undergoing a restructure.

After a 15-month restructure period including management reshuffle and business model refinement, the proposed name change to Wisr will be the final alteration if shareholders vote for the change at the extraordinary general meeting scheduled for 28 February 2018.

DirectMoney estimates the consumer finance sector is worth about A$100 billion per annum.

The market reacted positively to today’s news with DirectMoney’s share price soaring more than 50% to close the day at A$0.041.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for an array of industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has covered a myriad of small and large cap ASX and dual-listed stocks.