Things to Know About Payments Provider Tyro; Nearing IPO Closure

  • December 02, 2019 03:31 PM AEDT
  • Team Kalkine
Things to Know About Payments Provider Tyro; Nearing IPO Closure

According to Michele Bullock, Assistant Governor (Financial System) at RBA,

“The Australian payments system has undergone a substantial transformation over the past few decades”;

“Much of this has occurred as competition between payment systems and participants, and improvements in technology have driven innovation in payment offerings to consumers and merchants”.

Moreover, Australia has witnessed a remarkable transformation in the payments industry with a greater number of players providing technology-driven, innovative and unique payments solutions. As stated by the NSW Government, Australian FinTech venture capital firms have expanded by 150% over five years.

With a strong supportive environment for the Fintech companies, Australia has witnessed remarkable growth not only in the number of Fintech businesses but also in the intensity of expansion and growth of these businesses.

Several businesses have already spanned into multiple countries with a significant number of active customer base in the domestic and international market along with getting listed on ASX.

One of the most discussed Fintech companies awaiting its listing on ASX is Tyro Payments Limited (Proposed ASX code: TYR).

Being a technology-driven and values-based company, Tyro Payments Limited provides simple, flexible and reliable payment solutions and value-adding complementary business banking products to the Australian businesses.

Tyro IPO

Tyro lately announced the opportunity for the public to become a shareholder in Tyro Payments Limited through its IPO, for which the Prospectus was lodged with the Australian Securities and Investments Commission (ASIC) on 18 November 2019.

The company is offering to issue Shares equal to $0.125 billion. The number of Shares issued will be based on the Final Price and is in the range of 45.5 – 50.1 million based on the Indicative Price Range.

Just in time heads-up regarding the Offer is as below:

  • Priority Offer is open to
  • investors who have received an invitation to participate in the Priority Offer from Tyro;
  • and who have a registered address in Australia and are not located in the United States;
  • Applications under the Priority Offer for an amount less than the amount indicated on the personalised invitation must be for a minimum of $2,000 of Shares and in multiples of $500 of Shares thereafter;
  • Payment must be made in Australian dollars and via BPAY® or direct deposit and must otherwise be made in accordance with the instructions provided in the personalised invitation;
  • If the application amount is greater than A$20,000.00, one must pay directly to the bank account mentioned in the prospectus;

Important dates regarding the various proceedings of the Offer are given in the figure below:

Important dates

The Company looks forward to driving increased financial flexibility to propel the pursuit of its growth strategy, which includes:

  • expanding payments and banking offerings;
  • increasing merchant base in the existing core verticals;
  • entering two new industry verticals – accommodation and services;
  • driving eCommerce offering;
  • product innovation; and
  • potential M&A and strategic partnerships.

For the shareholders, the Offer is anticipated to provide them with access to greater liquidity and secure other benefits that are expected to follow from the listing on ASX.

listing on ASX

The Company was founded in the year 2003 and has since then maintained a track record of innovation, creating purpose-built solutions and being first to market in order to be the first technology company to receive an Australian specialist credit card institution licence in the year 2005.

28% Increase in Tyro’s Revenue

The success of Tyro’s approach is reflected in the strong and continued growth achieved across its key measures of success like transaction value, revenue and number of merchants. During FY2019, Tyro achieved:

  • 31% increase in transaction value processed to $17.5 billion (FY18: $13.4 billion);
  • 28% increase in revenue and income to $189.8 million (FY18: $148.2 million);
  • 25% increase in number of merchants to exceed 29,000 (FY18: 23,245 merchants);

Further, Tyro also reported a pro forma EBITDA loss of $6.1 million in FY19, which is low as compared to loss of $7.4 million in FY18, representing the Company’s ongoing investment to attract more merchants to its ecosystem, the investment in its team and its commitment to develop the payments and business banking products.

However, the Company clarifies that it may not be profitable in the Prospectus forecast period.

Tyro Products

Tyro is focused on providing customer-focussed payment solutions that are customized to their business while making banking simpler and easier. The solutions provided by Tyro includes:

  • Payments Solutions- Tyro Electronic Funds Transfer at Point of Sale (EFTPOS) and eCommerce;
  • Bank Account- Xero Payment;
  • Business Loans- Business Loan Calculator;
  • Tyro Connect- working on connecting businesses with integrated powerful loyalty apps that reward customers.
Tyro’s Market Presence

Tyro operates in the Australian card payments market which totalled $651 billion in annual transaction value acquired for the year ended 30 June 2019, having grown at a CAGR of 7.5%. The Company had a 2.7% market share as at 30 June 2019, having processed $17.5 billion in transaction value.

The company is well positioned among several key trends of the payments industry including cash to card migration, integrated payments, contactless card payments, e-commerce mobile payments and relatively stable merchant fees.

Tyro’s Market Presence

Tyro’s Board of Directors

The Board of Directors of Tyro have expertise across financial services, technology, retail and health sectors accumulated through years of experience and current active and passionate engagement in the Company’s business.

The BoD of Tyro comprises of:

  • David Thodey AO- Non-executive Chairman- Has more than 40 years of experience in the technology and telecommunications industries with a track record of creating brand and shareholder value, and has been successfully involved in innovation across a wide range of sectors;
  • Robbie Cooke- CEO and Managing Director- Has over 30 years’ experience in the oil and gas, mining, lotteries, wagering and online travel industries, and earlier was the Managing Director and CEO of Tatts Group Limited where the role concluded upon Tatts merging via a scheme of arrangement with its Australian peer, Tabcorp Holdings Limited;
  • Hamish Corlett- Non-executive Director (Non-independent)- Has over 20 years’ experience in investing and investment banking, and earlier worked as an Investment Manager at Caledonia Investments, a global fund manager, and an Analyst at Caliburn Partnership (now Greenhill);
  • David Fite- Non-executive Director (Non-independent)- Has over 25 years’ experience in the financial services industry with several roles at Westpac Banking Corporation, including Treasurer, Assistant Chief Financial Officer and the Group Executive responsible for all retail and business banking products in Australia; and has also worked at Japan’s Shinsei Bank (formerly known as The Long-Term Credit Bank of Japan) as Senior Corporate Executive Officer, Chief Financial Officer and a member of its Board;
  • Catherine Harris AO- Non-executive Director- Has over 40 years’ experience in the retail industry with roles at the Affirmative Action Agency and the University of NSW to name a few; and was awarded the Australian Public Service Medal and The Centenary Medal;
  • Fiona Pak-Poy- Non-executive Director- Has over 25 years’ experience in a variety of industries, for companies ranging from startups to large public companies and not-for-profits and has served on various boards, including MYOB and StatePlus to name a few.
  • Paul Rickard- Non-executive Director- Has over 25 years’ experience in the financial services industry and was previously Executive General Manager, Payments & Business Technology for Commonwealth Bank of Australia, where he was the founding Managing Director of CommSec; in 2005, Paul was named Stockbroker of the Year and admitted to the Industry Hall of Fame.
Bottomline

With a favourable outlook supported by government policies and customer penetration, Tyro is currently facing exposure to a compelling opportunity for its growth. The increasing technology acceptability among the customers is expected to drive the progress of Tyro significantly. However, the game is getting stronger day by day with other players like Afterpay, who have progressed at an unbelievable pace and have further expansion plans as well.


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