Online marketplace MyDeal to list on ASX in $260 million IPO

MyDeal ASX IPO MYD online marketplace
The online household goods retailer aims to raise $40 million and list in late October.

One e-commerce company gaining significantly from the pandemic-driven online shopping boom is MyDeal, which now plans to debut on the Australian Securities Exchange to help grow its online retail marketplace mydeal.com.au.

The Australian online household goods retailer sold more than 1 million products during the last financial year, generating $103 million in gross transaction value (GTV – that is, the total value of transactions processed on a cash basis before deducting refunds, chargebacks, discounts and coupons). This figure is 164% higher than fiscal 2019’s GTV figure.

In total, it pocketed $15.7 million in revenue during the 12 months to June 2020, almost tripling the prior year’s revenue of $5.4 million.

In addition to upgrades to the company’s platform infrastructure and the adoption of new artificial intelligence technology, MyDeal attributed the revenue boost to COVID-19’s impact on accelerating online retail sales in the second half of the year.

MyDeal chief executive officer Sean Senvirtne said the company was on track to make about $75 million in sales but following the virus’ outbreak, it hit $103 million.

What’s more, this shift to online shopping doesn’t appear to be dissipating despite restrictions being eased across Australia in the last few months and now, even in Victoria.

“What we’re seeing now is strong growth even outside of lockdowns. It’s possible that this shift is permanent,” he told media.

“People discover the convenience of online shopping – not needing to go to the shopping centre, or park the car – you can just order online and it’s delivered in the next few days.”

MyDeal is aiming to raise $40 million through the issue of 40 million shares (comprising 35 million new shares and an additional 5 million selldown shares) at $1 each, indicating a $258.8 million market capitalisation upon listing.

The offer opens on Thursday and is due to close 12 October with the company slated to start trading on the ASX under the ticker code ‘MYD’ later in the month.

Morgans Corporate and Royal Bank of Canada have signed up as joint lead managers on the initial public offering (IPO).

Low-cost operating model

MyDeal was founded as a pure play Australian e-commerce company by Mr Senvirtne in 2011 and now lists more than 5 million products on its marketplace from over 800 independent sellers.

The company operates as an intermediary, facilitating transactions between sellers and consumers, and has developed proprietary technology that enables the marketplace to scale quickly while retaining a low-cost operating model.

MyDeal’s main source of revenue is a commission fee charged to sellers for every product and service sold on its platform.

Additional revenue streams include transaction fees charged to the seller for each completed transaction, advertising revenue including promotional deals, monthly subscription fees for sellers, seller onboarding fees, and online direct sales of private label products (still in its infancy).

Sellers on the MyDeal marketplace remain responsible for managing their product listings, order fulfilment and customer support.

MyDeal’s main competitors include Amazon, Catch.com.au, Kogan.com (ASX: KGN) and Temple & Webster (ASX: TPW).

Growth strategy and use of funds

MyDeal aims to capitalise on the growing online shopping trend, which generated an estimated $25.7 million in sales in the Australian e-commerce market in the 12 months to June 2020.

The company said it will use IPO proceeds to invest in personnel and inventory, as well as advertising and branding and for working capital.

It will also use $5 million from the offer to pay existing shareholders who are selling down shares in the IPO.

In addition, MyDeal raised $3.5 million in funding this year by way of the issue of convertible notes, which will convert into equity immediately prior to listing.

Mr Senvirtne said the company has an “exciting roadmap of growth opportunities in the short to medium term, including development of our mobile apps and the expansion of our private label business.”

“I am also excited about the innovative solutions that we can deliver for our customers and sellers in the future as our marketplace continues to evolve,” he added.

The company’s goals include expanding its technology capability, capturing greater market share and growing its private label business through sales and marketing initiatives, as well as improving conversion rates and customer engagement to promote repeat customer sales.

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