Australian fintech Propell Holdings (ASX: PHL) has announced a $2.22 million entitlement offer to shareholders with ambitions to fund ongoing organic growth and an increase in its lending facility.
The company has invited shareholders to participate in the non-renounceable pro-rata offer of one new share for every 2.5 shares held on 27 April 2022, at an issue price of $0.058 per new share.
Propell is Australia’s first and only small-to-medium enterprise (SME) focused “all-in-one” platform that offers lending, insights and payment solutions through one product. It has leveraged its extensive customer data with an artificial intelligence (AI) based engine to deliver its products in an entirely digital format.
The company launched its app in mid-2020 and aims to improve the cash flow and financial wellbeing of Australian small businesses by aggregating a range of finance products and services including lending, payments and cash flow forecasting tools.
Propell’s entitlement offer opened at the end of April and will close on 19 May 2022. The adviser managing the rights issue is Reach Markets.
While the offer is for 1:2.5 shares at $0.058 each, Propell will allow existing shareholders to participate at the same issue price as under the previous initial placement which raised $1.36 million.
The company said the funds raised will be used to support an increase in its lending facility, as well as ongoing organic growth through working capital and cover the costs of the offer.
Recent financial performance
In its latest financial update, Propell announced a record quarter for lending, achieving a 211% increase from the December 2021 to March 2022 quarter. This growth was supported by the launch of a new line of credit product and improvements in platform customer financials and sentiment.
Platform customers also increased by 35% to more than 1,700 by the end of March.
In addition, lending volumes were driven by a 138% increase in average loan size, which the company said was a key indicator of customer quality – a critical measure in scaling the business.
Propell ended the quarter with $140,000 cash on hand.
Launch of new credit facility
Propell’s new line of credit facility can offer unsecured loans from $5,000 to $250,000 for up to 12 months, which has seen an increase in total approved facilities of $3.9 million to over $9 million, and an increase in average loan size by 138% quarter-on-quarter.
The company claims its digital platform enables a “simple and fast” customer journey from sign-up to approval “within minutes” and drawdown and settlement “within hours”.
The launch followed successful product trials in December and January.
Propell believes the product represents a new important revenue line that is expected to contribute materially to future income growth given its characteristics, larger average loan size and target segment demand.
“This is an important milestone for the company as it builds on Propell’s core proposition, further enabling fast and simple access for small businesses to the finance products they need to run and grow,” the company stated.
The company also continued development of its underlying platform throughout the March quarter, delivering continued updates to platform automation focusing on the four key areas of customer management, servicing, lending management and collections.