New Zealand buy now pay later provider Laybuy has had a solid debut on the ASX after listing.
While the number of providers continues to grow, Laybuy’s boss believes the rise in delayed payment services highlights the opportunities in the sector.
Laybuy joined the Australian stock exchange at 1200 AEST on Monday, offering shares at $1.41, after an initial public offering that raised $80 million from investors.
The share price finished up 45.39 per cent to $2.05.
Laybuy lets shoppers pay in six weekly instalments, which it says are more in keeping with budgeting, and helps shoppers and businesses trade even if they do not appear to have a common currency.
Laybuy has also been trading in the United Kingdom since 2018, a year after it began in New Zealand.
Chief executive and former banker Gary Rohloff said the UK was already its biggest market.
US giant PayPal recently announced it will offer a buy now pay later service and compete with the likes of Afterpay, Klarna, Zip and many more.
PayPal’s announcement caused the share prices of buy now pay later companies on the ASX to dive last week as investors feared for the incumbents.
Yet Mr Rohloff said the announcement was a sign of the opportunities in the sector.
“I think PayPal’s decision validates and legitimises what our industry is doing,” he said.
“There are trillions of dollars in retail and buy now pay later companies aren’t anywhere near penetrating that.”
He said PayPal’s entry to the sector would boost consumer interest in the same way that Amazon’s entry in Australia indirectly helped online traders such as Booktopia and Kogan.
There were 6,180 merchants and 542,000 customers doing business through Laybuy as of the end of August.
Laybuy charges merchants a commission of between three and six per cent for a sale.
The most common users are females aged between 22 and 32. The average order value is $150, according to Mr Rohloff.
Late payment fees, another revenue source, are capped at $40.
Most of the businesses using Laybuy deal in women’s fashion, however there are others. Dentists, vets and tyre repairers are some of the less common traders.
The funds raised from the initial public offering will largely help marketing efforts in the UK.
Asked why Laybuy focused on the UK rather than the US or other larger nations, Mr Rohloff said the UK was in its infancy with buy now pay later technology.
“That is why we are there,” he said.
He was working there prior to the coronavirus pandemic and plans to return once travel restrictions ease.
The business also has a $NZ20 million debt facility with Kiwibank to fund growth in Australia and New Zealand and an 80 million pound debt facility with US provider Victory Park Capital for the UK.
Laybuy will not provide earnings guidance or profit forecasts at this stage of its infancy.