Afterpay Touch Secures US$300 Million Funding Facility To Scale-Up Its US Business Expansion 

A leading player of the financial technology sector, Afterpay Touch wins US$300 million funding facility to jack up its business development plans in the United States.

In the announcement dated 3 May 2019, Afterpay Touch Group (ASX:APT) stated that it has inked a US$300 million receivables funding facility with the international investment bank, Citi, for the term of 24 months. The news sent the stock price to trade near to its 52-weeks high at $27.610, up 2.904% in a day-trade.

With this new facility, Afterpay’s US business would have a good exposure to external funding sources to support its annual underlying US sales and its expansion plan. The facility is said to complement the company’s existing NZ$20 million facility, A$500 million Australian receivables funding facility and liquidity position as a driving factor of APT’s near-term capital management strategy.

As per the report, the US facility would function as a warehouse funding facility in line with the Australian receivables facility. It outlines a key component of the company’s capital management strategy while providing the geographical diversification to the company’s debt funding sources and additional tenor to its debt maturity profile.

In the United States, the Afterpay customer base increased by ~40% or 260,000 in the 8 weeks since 31 December 2018 level. The merchant base also grew up with over 1,900 active merchants and more in a pipeline.

For the six months ended 31 December 2018, the company’s underlying sales increased by 147% to $2.3 billion compared to the previous corresponding period. It reflects the growth of 101% in active merchants and 118% in the number of active customers.

APT shareholders have recently approved the Equity Incentive Plan for its US employees designed to provide incentives to individuals who are integral to the ongoing success of Afterpay US, Inc. Under the Plan, Afterpay US Inc. may offer options which give eligible participants a right to acquire shares in Afterpay US Inc.

The company aims to achieve over $20 billion GMV by the end of Fiscal 2022. For this, the company has adopted a more weighted proposition towards the customer and merchant growth across its mid-term plan spanning 3 years.

APT currently focuses on accelerating United Stated and international business growth through investing capital in platform innovation, expansion of its global infrastructure, key brand relationships. The company has proportioned $10 million for further spend in mid-term growth acceleration investment activities during the second half of Fiscal 2019.

Following the near-term investment as planned, the company expects to report significant growth in operating leverage and EBITDA and net transaction margins of ~2% as the company as it advances towards the FY22 target of over $20 billion.

Technology-driven payment company, Afterpay, has returned gigantic 884.81% yields to investors since its listing on ASX in July 2017. The stock has zoomed up by 351.43% over the past 12 months including a positive price change of 64.28% recorded in the past three months.

Also Read: Afterpay Touch joins the $5 billion club

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