Afterpay to raise $800m as co-founders cash in

7 July 2020, Written by David Simmons

Afterpay to raise $800m as co-founders cash in

Buy-now pay-later (BNPL) giant Afterpay (ASX: APT) will ride significant FY20 sales growth with an $800 million capital raise.

The company's founders Anthony Eisen (pictured left) and Nicholas Molnar (pictured right) have also decided to sell down 2.05 million shares each, representing 10 per cent of their respective holdings in Afterpay. 

The pair are expected to bank $126.6 million each, depending on the institutional bookbuild.

The capital raise is comprised of a $650 million institutional placement, with an underwritten floor price of $61.75 per new share, representing a 9.2 per cent discount to the closing price on 6 July.

A further $150 million will be raised through a share purchase plan (SPP).

The company's raise comes as it continues to witness growth during the COVID-19 pandemic.

A shift toward online spending, with customers developing an aversion to traditional credit products and an increased focus on budgeting has played in the favour of the BNPL company according to Afterpay.

The company says it will use the additional capital to continue to accelerate growth and comes on the back of the announcement that the company achieved $11.1 billion of underlying sales in FY20 - double what it achieved in FY19.

The new capital will also play a part in the company's expansion into Canada, due to launch in Q1 FY21.

"Today's announcement is the outcome of a lot of hard work and unwavering commitment by a world class team," says Afterpay CEO Anthony Eisen.

"The flexibility in our business model allowed us to manage risk when we needed to, but also take advantage of positive customer sentiment and behaviours. Our ongoing investment in growing our retailer and customer bases, and global expansion objectives, will ensure we continue to deliver long term benefits to our shareholders.

"By raising capital today, we believe we will be in the strongest position possible to execute on our strategic initiatives and growth aspirations."

The co-founder sell-down represents approximately 1.5 per cent of total shares outstanding in Afterpay, and will be fully underwritten with pricing determined under the bookbuild for the institutional placement.

After the sell-down Molnar and Eisen will remain Afterpay's largest shareholders, with a relevant interest of approximately 18.4 million shares respectively, worth $1.14 billion each.

"Mr Eisen and Mr Molnar remain committed to Afterpay and have each confirmed that they will not sell any further shares until after the Company's 2020 AGM," says Afterpay.

Afterpay sales double in FY20

The capital raise follows the announcement that Afterpay achieved 112 per cent growth in underlying sales in FY20, totalling $11.1 billion.

In Q4 specifically, sales hit $3.8 billion, 127 per cent above Q4 FY19. This represents Afterpay's highest quarterly performance on record, reflecting the strength of BNPL during the COVID-19 pandemic.

The US segment of Afterpay in particular saw sales grow substantially, up 330 per cent on the prior corresponding period, hitting $4 billion for FY20.

Success in the US comes just ahead of Afterpay's planned launch of an in-store offering with its US merchant launch partners. 

"With over 5 million active customer already on the Afterpay platform in the US, we expect our in-store offering to be well received by customers who are accustomed to using Afterpay online," says Afterpay.

The company now has 9.9 million active customers during FY20, 116 per cent above FY19, and active merchants reached 55,400 in FY27, up 72 per cent in FY19.

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Business News Australia

 
Author: David Simmons

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