Australia’s BNPL sector continues to ‘Sezzle’ as new fintech makes strong debut
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As the latest buy now, pay later (BNPL) fintech platform to hit the ASX, Sezzle (ASX: SZL) came in with a fair bit of hype.
And the stock didn’t disappoint in early trade, opening at $2.50 after Sezzle raised $43.6m in an over-subscribed IPO priced at $1.22.
After an initial surge, the price settled and a short time ago SZL was trading at around $2.20.
Speaking with Stockhead on the ASX floor today, Sezzle CEO Charlie Youakim said the early price action “reflects some of the demand” seen at the IPO stage.
“But what I’ve said to my team is of course we want investors to feel good about us, but we also want to think 7-10 years out,” he added.
“Think long-term, don’t ‘stock-watch’, do a great job and the price will follow.”
Gavan Carroll of Ord Minnett Corporate Finance said the plan for the ASX listing was first considered in 2018 and was a carefully structured process.
“Sezzle required a capital markets solution that would support its rapid growth trajectory, both at the current juncture and to scale in the future,” he said.
“The ASX provided this in terms of deep liquidity and a sophisticated investor pool and afforded Sezzle a potentially more efficient capital raising process than traditional routes it may have otherwise pursued in the US.”
The company is the second BNPL to list on the ASX this year, following Splitit (ASX: SPT) in late January.
Along with market-darling Afterpay (ASX: APT), Sezzle’s sizzling entrance is evidence that the BNPL sector still offers a strong value proposition in the eyes of investors.
For the US-based Sezzle, a key part of that proposition is based on whether the company can leverage its home-ground advantage to build market share in the huge North American market — where APT is currently making a serious push.
And when it comes to US growth, Youakim reiterated that it’s still “early days”.
“The Australian investment community understood the model worked, so they were asking differentiation questions — how are you going to execute?”
“Whereas the US investor was still ‘is this going to be successful?’ It was 2-3 years behind, so it just took some convincing.”
“But they’re definitely with us now. I think the biggest retailers and the biggest banks are starting to realise this is a thing, and everyone’s starting to talk about it.”
With its new capital war-chest, Youakim said the primary use of funds will be in sales and marketing, where the company plans to “really go after it” and scale up its merchant network.
At the same time, “you don’t want to forget about product differentiation, which means listening to your customers — both on merchant and consumer side.”
“We’ll also deploy some capital to build out our data sciences team — those are probably the top three buckets in the near-term,” Youakim said.