AUS
NZ
UK
CA
USA
IND
Summary
- Stellar ASX debutant Laybuy is the latest addition to the fast-growing buy-now-pay-later (BNPL) space.
- New Zealand-based Laybuy has been under the spotlight with growth in online shopping.
- Laybuy shares finished first day’s trade on 7 September 2020 at $ 2.05, marking an impressive uptick of 45 % from the IPO issue price.
- After a deep IPO freeze during 1H20 on fears of Global Virus Crisis, the market has started to gather momentum amid economic reopening and vaccine hopes.
- Funds raised by IPOs are a great means to provide companies with necessary capital for business expansion and diversification, pumping innovation and driving growth.
Driven by the explosive growth across the BNPL sector in the last few years, the Australian share market has attracted a multitude of high profile BNPL listings. Consequently, names like Afterpay, Zip, Sezzle, Splitit and Openpay continue to be under investor’s watchlist.
BNPL firms continue to benefit from online shopping boom amid the pandemic. Perfectly timed, ASX welcomed a new baby on board on 7 September 2020. Auckland-based BNPL company Laybuy Group Holdings (ASX:LBY) has been under the investors’ watchlist after its impressive debut on the exchange.
“This is a significant milestone for my wife, our two sons and I and the entire team at Laybuy”, says Co-Founder and Managing Director Gary Rohloff.
Laybuy’s Trading Highlights
The Laybuy IPO was met with strong demand from both institutional and retail investors, including a large number of institutions from Australia, New Zealand, Asia, North America and UK.
The IPO raised $ 80 million via a $ 40 million primary issuance and a $ 40 million sell-down by existing shareholders. Close to 57 million shares were sold at a share price of $ 1.41.
On the first day of trade, the stock reached a high of $ 2.3, before settling at ~ $ 2.05. In merely 10 minutes of initial trade on 7 September 2020, LBY shares were up ~63 %.
The second day of trade, 8 September 2020, demonstrated a fair play with LBY up by 0.5 % at $ 2.06, with over 6.5 million shares traded. The Company has a market cap of ~$ 359 million.
Laybuy’s IPO Motive
Availability of capital, means to expand, innovate, and survive competition are few purposes why companies choose to go public. Besides, increased transparency and share listing credibility facilitate the businesses in obtaining better terms when seeking borrowed funds. As for the investors, significant returns in the long term is the main attraction, given the growth prospects of the business.
The Laybuy IPO has the following key motives-
- Funds raised in the IPO will be used to drive future growth.
- The capital raised will be used to increase the Company presence in the UK.
- It may allow the group to continue delivering a strong marketing strategy to grow its customer base and merchant partnerships.
Acquainting with Laybuy
Laybuy is a BNPL provider with a market leading position in New Zealand and growing presence in Australia and the United Kingdom. The Company was launched in 2017 in New Zealand, and post early success, started inaugural business in Australia and the UK in 2018 and 2019, respectively.
Laybuy offers an innovative payment platform, bringing the conventional lay-by model into the 21st century. Consumers can shop now, receive their purchase right away, and pay it off over weekly interest-free payments.
As understood, the Laybuy payment platform enables customers to split the payment of purchases, both online and instore, across six, weekly, interest free instalments, the first being at the point of sale.
Currently, Laybuy is available across a wide range of retail segments including homewares, fashion, sports, travel and entertainment.
Laybuy is led by an experienced Board and management team with extensive retail, commercial, governance and financial skills. Its growth strategy is to leverage the Company’s scalable platform.
Three prime components of this strategy are-
- To increase market share in established geographies.
- Rapidly grow in the UK and other international markets.
- Consider new platform enhancements to drive network effects.
Laybuy’s Operational and Financial Footing
As at 30 June 2020, the Company had 5,672 Active Merchants and 473,000 Active Customers. It had processed more than NZD 116 million Gross Merchandise Value (GMV) of sales via its platform for the June 2020 quarter.
Trading since June 2020 has been solid with NZD 86.7 million GMV across July and August 2020. Subsequently, Active Merchants at the end of August totalled 6,180 and Active Customers totalled 542,000.
Besides, the Company has secured an NZD 20 million debt facility with Kiwibank to fund its New Zealand and Australian operations. Another £ 80 million debt facility with U.S funding provider Victory Park Capital has been secured to fund growth in the UK. These expanded debt facilities, existing capital and new capital provide substantial capacity to grow GMV to ~ NZD 4 billion.
It will be interesting to watch this newbie’s journey on the ASX as it focusses on achieving its goal of creating a ubiquitous global brand.
GOOD READ: BNPL Stocks, Capital Raise and Success Stories – Splitit, Afterpay
