Strong oversubscriptions push Payright raisings beyond $25m

Demand for shares in Payright Limited (Payright), Australian-based provider of choice for higher price-point buy now pay later (BNPL) solutions, has seen the company exceed its capital raising target of $25 million.

The company closed its initial public offer raising at approximately $18.5 million, well above the underwritten allocation of $10 million. It follows Payright’s pre-IPO funding round where it secured $7 million in the form of convertible notes.

The completion of the public offer and the issue of shares arising from the pre-IPO raise will see Payright’s market capitalisation, at the offer price of $1.20 per share, surpass $100 million.

Payright commenced operations in 2016 shortly after being founded by Joint Chief Executive Officers, Myles and Piers Redward. The company specialises in the provision of both in-store and online BNPL solutions in Australia and New Zealand, with a focus on higher-value, more considered purchases between $1,000 and $20,000. With an average transaction value of around $3,000, the company views its speciality in higher price-point purchases as a key point of difference in the rapidly-growing BNPL sector, with larger transaction sizes lending themselves to a more diversified merchant mix.

Payright’s 2,400-strong merchant partners span a diverse range of industry sectors, many of which are under-serviced by the BNPL sector, including:

Retail: lifestyle, sports, homewares and outdoor equipment;

Home improvement: including solar, internal and external furnishings, flooring, fencing, roofing and trade services;

Health and wellbeing: including beauty, fitness and lifestyle, cosmetics, dental, veterinary and audiology;

Photography: including photographic shoots, artwork, equipment, printing and services;

Education: including online and further education courses; and

Automotive: including after-market automotive accessories, tyres, vehicle repairs and servicing.

Payright Co-Founder and Joint Chief Executive Officer, Piers Redward, said the strong response to both the public offer and convertible notes issue reflected investors’ recognition of the company’s differentiated offering and growth prospects.

“It’s a clear vote of confidence in our strategy, and in our capacity to keep growing the volume and quality of our merchant and customer bases across industry segments with little direct competition for BNPL services.”

Payright Co-Founder and Joint Chief Executive Officer, Myles Redward, said the profile of the company’s customer base relative to other BNPL providers was a key competitive advantage.

“Around three-quarters of Payright customers are over the age of 35, with homeowners making up the largest segment of our loan book. Approximately 90% of the loan volume is attributed to customers with high credit ratings.”

Payright achieved significant growth in FY20, with revenue and gross merchandise value (GMV) increasing 188% and 64% respectively. The company recorded compound annual growth of 230% in new customers for the three‑year period to 30 June 2020, along with a sustained increase in active merchants including a shift in recent quarters towards larger, enterprise-level merchants. Credit arrears remains among the lowest across the BNPL industry.

Industry research conducted by Payright has found that 55% of consumers want a BNPL payment option for purchases exceeding $1,000, and 43% indicated that having a BNPL option at or above this price-point would help them with budgeting.

Proceeds from the company’s recent capital raisings will help fund Payright’s growth strategy as it seeks to leverage its differentiated market offering and build on its strong competitive position.

Settlement of the offer is expected on 18 December 2020, followed by the allotment of shares under the offer on 21 December 2020. Payright shares are expected to commence trading on the Australian Securities Exchange (ASX) on 23 December 2020, under the code ‘PYR’.