ASX fintech small caps: The cold November gains (and losses)

ASX fintech small caps performed fairly well among the November rain gains, as global stocks surged across the board.

However, the sector ended up lagging the big end of town, as a barnstorming rally in the major banks helped the ASX200 to its biggest monthly rise in 32 years.

Of the 25 listed fintech players tracked by Stockhead, 12 posted a gain while four traded flat and nine lost ground for the month.

Those wins and losses washed out to an average gain of six per cent, tailing the ASX200 which posted a 10 per cent lift.

(Over 2020 more broadly though, it’s been a pretty spectacular year for the fintech sector.)

Here’s a summary of ASX fintech small caps for the month of November

Scroll or swipe to reveal table. Click headings to sort.

ASX fintech small caps – the leaders

Leading the pack was investment management platform Cashwerkz (ASX:CWZ), which climbed steadily throughout the month to finish 36.7 per cent higher.

CWZ’s gains came on minimal news flow, although by November 30 it responded to an ASX price query by addressing reports in the AFR that Fortlake Asset Management — in which Cashwerkz has a stake — was preparing a bid for the fixed income business run by UBS Asset Management.

Further reports suggest an offer is still in the works, although UBS indicated it has no plans to sell the unit.

Elsewhere, fintech’s best performing sub-sector this year — buy now, pay later (BNPL) — was more subdued in November.

However, BNPL player Humm Group (ASX:HUM) stood out from the rest to post a 34 per cent gain.

Humm adopted a similar strategy to a couple of big November winners in the resources sector, by going for a name-change.

Formerly Flexigroup, the company also benefited from a mid-month deal with payments giant Mastercard, which will allow its BNPL offering to be made available anywhere Mastercard is accepted.

Across the BNPL cohort, only Afterpay (ASX:APT) and Zip Co (ASX:Z1P) finished higher for the month while the broader sector (aside from Humm) declined by 4.1 per cent.

Among the fintech consumer lenders, Money3 Corp (ASX:MNY) topped the pops with steady gains throughout the month to finish 31.1 per cent higher.

The company’s highlights during the month included the announcement of a $250m lending facility with a “globally recognised A+ rated bank”.

Major bank partnerships are seen as a key strategy for a number of fintech lenders, because they allow for an expansion of the lending platform with a corresponding fall in wholesale funding costs.

Embattled small business lender Prospa (ASX:PGL) also had a good month, climbing by 29.2 per cent to close at 93c.

PGL listed on the ASX in June 2019 at $3.78, but the stock has struggled for traction in 2020 after it fell below 50c at the height of the COVID-19 crisis in March.

Investment management group Raiz Invest (ASX:RZI) also continued its 2020 rally with a 29.3 per cent gain in June.

Formerly known as Acorns (the investing platform that rounds up spare change to invest), Raiz offers exposure to simple investment products such as ETFs and has been pursuing a regional expansion strategy with a focus on Indonesia.

And in the red-hot payments space, two companies closed out November with a double-digit monthly gain.

One was $1.3 billion mid-cap EML Payments (ASX:EML), while the other was $20m micro-cap Integrated Payment Technologies (ASX:IP1), which announced plans to merge with unlisted compliance platform Comply Path in a share-based deal.

Subject to shareholder approval, IP1 plans to issue 573,260,447 shares at 3.5c to the existing shareholders of Comply Path, in a deal which values the business at a notional $19.5m — a similar figure to IP1’s current market cap.

IP1 said Comply Path generated revenues of around $1.5m in each of the past two years, giving it a valuation multiple of around 13x revenue.