BNPL: Afterpay gets the all-clear from Spain while OpenPay ‘targets profitability in Australia’
Link copied to
Late last year, BNPL leader Afterpay (ASX:APT) flagged that its takeover by Jack Dorsey-led Block Inc was almost a done deal — pending regulatory clearance from the pesky central bank of Spain.
The company said it was hoping for final sign-off at the start of this year, and this morning it got it, with approval from Spanish regulators confirmed overnight.
Now that Bank of Spain approval has been received, the Scheme for the Block Inc transaction “is fully unconditional and will be implemented without the need for further shareholder or Court approval, in accordance with the implementation timetable”, APT said.
The scheme will be implemented on February 1, with the merged entity — which includes Block CDIs that will trade on the ASX — set to commence trading on February 2.
Like other BNPL stocks, Afterpay has been getting hammered to start the year in an environment of increasing competition, lingering doubts over growth rates and rising bond yields.
Some good news on the regulatory front saw APT shares rise by 5% in morning trade today to ~$77, still well below the ~$126 it was priced at (in Block Inc shares) when the deal was announced last August.
(But almost 10x from the ~$8 lows it reached at the height of the pandemic in March 2020. What a ride it’s been.)
Elsewhere in BNPL news, smaller competitor OpenPay (ASX:OPY) provided a trading update, where like its larger competitors APT and Zip Co, it reiterated its intention to focus on growth in the US market.
OpenPay also said that it achieved its highest-ever monthly total for transaction volume ($34.6m).
Investors responded positively, sending shares in the company more than 15% higher to 73c.
That’s still below where OPY shares started the year around 77c.
And as a gauge of the wall of capital that poured into BNPL following the pandemic, it marks a fall of more than 80% from OPY’s all-time highs of $4.70 in August 2020 — the culmination of a furious +10x rally from lows beneath 50c in March 2020.
OpenPay said it’s looking to capitalise on early market share in US market verticals such as health (veterinary and dental) and automotive markets.
In October last year, OPY announced it had secured a US$271.4 million asset-backed revolving debt facility with Goldman Sachs today – plus mezzanine financing by Atalaya Capital Management.
At the time, the company said its capital backing would be used to “deliver the funding to enable our growth in the US at scale”.
Since its October launch, OPY said its US platform has “begun onboarding dentists, veterinarians, and auto dealers across the US”.
OPY also commenced a “confidential pilot with a large US healthcare insurance provider (with access to over 50 million customers) that has the potential to rapidly drive scale and value through the responsible funding of payment plans for patient healthcare procedures”, the company said.
Elsewhere, the company said its Australian business chalked up record quarterly transaction volumes of $87m in Q4, with a record month in December ($35m).
The company said that flowed through to revenue margins of 7.2%, which it called “market leading”.
OPY’s “strong margins together with improved productivity support our ambition to deliver profitability in Australia within the next 12-18 months”, the company said.