Highlights

• IOUpay Asia, a 100%-owned subsidiary of IOUpay, has secured a debt facility valued at AU$1.7 million from a renowned Malaysian NBFI.
• The debt facility would support the funding for the new Bridging Loan product initiative, being developed for newly hired Malaysian federal government employees.
• The facility limit will cover the first 500 Bridging Loans made as part of a test product launch.
• IOUpay highlights that the development indicates its ability to secure non-dilutive debt to finance growth initiatives.

ASX-listed fintech firm IOUpay Limited (ASX:IOU) has hit an important milestone in its journey to boost its loan portfolio and establish access to efficient sources of capital.

The company's wholly-owned subsidiary, IOU Pay (Asia) Sdn Bhd, has signed a Letter of Offer for a debt facility from a renowned Malaysian Non-Bank Financial Institution (NBFI). The special purpose wholesale finance facility is for one year and is valued at approximately AU$1.7 million.

The proposed debt facility is designed to offer 100% funding for batches of underlying Bridging Loans with repayment matched in terms of maturity. IOUpay is developing the new short-term Bridging Loan product with its investment partner I.Destinasi Sdn Bhd (IDSB) for newly-hired Malaysian federal government employees.

Following this development, IOU will now be working with the NBFI to finalise and agree on detailed terms and conditions with the drafting of facility documentation. 

Debt facility to fund the new short-term Bridging Loan product

The debt facility would provide the required financial support for the new short-term Bridging Loan product initiative with the flexibility for (subject to lender approval) extension to accommodate future growth.

It is to be noted that this is the company’s first debt facility, expected to enable IOUpay to build debt servicing credibility in the debt capital markets and facilitate greater access to non-dilutive capital.  

IOUpay’s ability to secure non-dilutive debt for growth initiatives

Although the Facility Limit has been initially established at AU$1.7 million, the NBFI has expressed interest in offering a revolving facility with a limit high enough to meet the anticipated Bridging Loan originations (after an initial trial period and subject to performance).  

As per IOUpay, the NBFI's lending requirements and the company's planned strategy for the launch of various instalment-based financial products are, in this regard, strategically aligned.

This facility limit will cover the first 500 Bridging Loans made as part of a test product launch, with an eye toward expanding the facility after the current parameters are successfully implemented.

© 2022 Kalkine Media®, Data source: Company update

Stock price information - At the time of framing this article, the stock value of IOU stood at AU$0.046 apiece on 14 December 2022, up over 1% from the last close.