Splitit to give Afterpay a run for its money after bursting onto the ASX with an oversubscribed IPO
Afterpay rival Splitit (ASX: SPT) is generating significant investor buzz, with the company’s shares surging on its ASX debut.
The Israeli-based instalment payment solutions company, which has offices in London and New York, begun trading at $0.355 soon after its late-morning listing. This was a significant premium on its $0.20 initial public offering price.
The company’s heavily oversubscribed IPO saw the company raise $12 million via the issue of 60 million shares, giving Splitit a market capitalisation of $54 million.
The IPO was supported by new and existing investors, including a diverse group of institutional, high net worth, and retail investors.
The company will use funds from the raising to strengthen its sales and marketing efforts which are aimed at accelerating merchant acquisitions and building distribution channels.
The proceeds will also go towards developing new deliverables including next generation mobile solutions and a mobile wallet.
Splitit’s business model operates similarly to other payment giants in the market, such as Afterpay (ASX: APT).
The company enables consumers to shop online, on mobile or in store without paying anything upfront, giving shoppers the ability to pay off the purchase via interest free instalments.
Shoppers can split their purchases into a maximum of 36 interest-free monthly payments using their existing Visa or Mastercard.
It’s Get Now, Pay Later solution enables merchants to offer shoppers the option to try out items for up to 90 days before any payment is charged to the credit card.
However, the company’s main point of difference is that it takes consumers credit card details at the time an order is placed, unlike Afterpay.
Use of Splitit’s technology requires no application, registration or credit check.
The buy now, pay later service is a rapidly growing market currently being led by disruptive start-ups such as Afterpay and zipPay.
However, these financial payment providers have come under fire in recent months, after reports emerged of consumers getting into debt with the services. This prompted debate over whether the services should be forced to meet responsible lending rules in a push to protect the consumer.
The background noise hasn’t diminished Splitit’s momentum as it looks to make its mark in the booming payment instalment sector, with merchant transactions reaching $94 million at the end of the December quarter, up 52% on the previous quarter.
The outlook for the company remains positive, with the onboarding of new merchants continuing.
“The global pipeline continues to thicken with both direct and distribution channels shaping up to deliver significant results through 2019 and beyond,” Splitit recently said.
The company’s shares had climbed to $0.38 by late afternoon trade.