MoneyMe lists on the ASX to expand its edge against banks and compete with buy now pay later market

Making a pre-Christmas run on the ASX is MoneyMe, an online consumer credit business following in the footsteps of Buy Now Pay Later (BNPL) heavyweights such as Afterpay (ASX: APT) and Zip Co (ASX: Z1P).

The Sydney-based personal loan group has raised $45 million through an initial public offering, issuing 36 million shares priced at $1.25 per share. This offer implies a market capitalisation of $211.8 million and an enterprise value of $175.3 million.

The company was admitted to the official list under the ticker code ‘MME’ on Tuesday but will commence trading on the ASX on Thursday.

MoneyMe follows a quick succession of recent ASX floats including billion-dollar fintech company Tyro Payments, which listed at the end of last week.

Another BNPL provider, Melbourne-based firm Openpay, launched an IPO last week to raise $50 million with plans to list just before Christmas.

Real estate platform

MoneyMe offers unsecured personal loans of up to $25,000 and a revolving line of credit known as ‘Freestyle Virtual Credit’ up to a limit of $10,000.

The company claims its applications take five minutes to complete with funds disbursed or credit facilities becoming available “shortly after an applicant is approved”.

However, the main point of difference between MoneyMe and other consumer lenders is its ListReady service recently launched in the real estate sector, which offers a deferred payment service to homeowners trying to sell their house.

This service enables homeowners to postpone the payment of their vendor paid advertising costs (such as property marketing and styling costs) closer to the settlement of the sale, by borrowing up to $25,000 on a 60-day interest-free term.

Growth prospects

In its prospectus, MoneyMe said ListReady is one example of the company’s ability to rollout products in markets where there is “opportunity for disruption through innovation”.

“In the medium term, we intend to organically expand our product set in line with the growing credit and payment needs of our customer base over time,” it stated.

The company also highlighted the United States consumer credit market as an “attractive market opportunity”, valued at more than US$4 trillion (A$5.86 trillion).

“We have been testing the US market since June 2017 to evaluate the efficacy of our SEO and SEM strategies and plan to establish a beta version of MoneyMe in the US market, which we expect to complete in FY21,” it said.

Financial performance

According to MoneyMe chief executive officer and managing director Clayton Howes, the company has originated more than $340 million in loans to over 80,000 customers across Australia.

“We believe this is because we have built a likeable, innovative and customer-focused brand, with the products, technology and people to match,” he said.

The company has a strong track record of growth, achieving a 42% compound annual growth in revenue from the financial years of 2017 to 2019. It has also produced a CAGR of 49% in its gross loan book size over the three financial years.

MoneyMe chairman Peter Coad said the net IPO proceeds would be used to invest in MoneyMe’s core business model and pursue its growth strategies, “including increasing market penetration and growing our total addressable market through product innovation and expansion into new markets”.

The funds will also be used to repay corporate debt, Mr Coad added.

Mr Howes said “customer preferences for faster, more convenient and tailored products are providing a tailwind” for companies like MoneyMe.

“We combine our in-house cloud-based technology platform with artificial intelligence and risk-based lending principles to assess credit risk and streamline the credit approval process, so that we can deliver frictionless credit products and ensure a seamless customer experience,” he said.

According to the prospectus, Mr Howes is expected to hold a 29.7% shareholding in MoneyMe at the completion of the IPO.