The deal is expected to add further value for CI1, which already generated net profits of more than $4m in the 2020 financial year.

Diversified fintech platform Credit Intelligence (ASX:CI1) is heading into 2021 with strong momentum following a key acquisition this month.

The company is now uniquely positioned in the B2B finance market, after acquiring a majority stake in fintech lender YOZO Finance for $1.38m in cash and scrip.

Shares in the company rose by another seven per cent in morning trade to 3c on strong volumes, as the market assesses its revised value proposition.

 

Market opportunity

Developed in collaboration with the Computer Science & Advanced Analytics Institute at UTS, Yozo Finance leverages an advanced artificial intelligence (AI) solution to provide automated lending services for small businesses, with faster approval times.

As a leading debt restructuring and insolvency management company in its own right, the Yozo acquisition gives CI1 an opportunity to diversify its product offering in the fast-growing market for business lending services and BNPL products.

The strategic rationale for the move was also made in connection with the explosive growth in Australia’s retail BNPL sector in the wake of the COVID-19 pandemic.

As a result, the Australian Securities & Investment Commission (ASIC) has flagged the prospect of increased sector regulation around credit management.

With its debt restructuring business and a proprietary AI solution, Credit Intelligence is now positioned as an industry provider to help buy now, pay later consumers better manage their debt.

In an investor update to the market this morning, the company highlighted that the Yozo Finance platform has already built up a customer base of more than 300 clients since its 2019 launch.

However, with the synergies provided by CI1 across its product suite, the platform is now set for rapid growth into the 2021 year.

That bodes well for a company which is already generating substantial profit margins, having booked a net profit after tax of $3.581m in the 2020 financial year, on revenues of $13.611m.

Managing director Jimmie Wong said Credit Intelligence now has a “fantastic opportunity” to drive accelerated revenue growth in the year ahead.

“By integrating YOZO’s AI platform we can fully digitise our entire offering for more efficient processes where we can build a database and up-sell our suite of products to new customers,” Wong said.

“We now offer a comprehensive full-service offering with a specially designed product to meet the needs of all SMEs.

With momentum behind the share price, a market cap of just $34.6m and annual net profit growth of more than 250 per cent, CI1 is uniquely positioned for a big year ahead in 2021.

 

 This article was developed in collaboration with Credit Intelligence, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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