Fatfish Group flags B2B ‘BNPL’ platform (with interest)
Tech venture stock Fatfish Group (ASX:FFG) says it’s getting on the BNPL (buy now, pay later) train in its core south-east Asian markets.
FFG will launch the offering through Smartfunding Pte. Ltd, a Singapore-based company majority owned by FFG’s Swedish subsidiary Abelco Investment Group AB.
FFG shares gained around 15 per cent at the opening bell.
After trading at or below 1c for most of 2020, the stock has found momentum in recent months and is currently trading at multi-year highs above 5c.
Consumer-based BNPL platforms have provided a major talking point in 2020. However, FFG’s proposal has some key differences.
For starters, it’s B2B (not B2C). Fatfish said Smartfunding plans to roll out its instalment offer to facilitate the “procurement of equipment or services” for business customers.
Companies can apply digitally for amounts between $S25,000 and $S1,000,000, with instalment repayment plans over 12 or 24 months.
Repayments will also be made with a “competitive interest rate”, FFG said.
A key feature of ASX-listed B2C BNPL platforms is that they don’t charge interest on repayments, which so far means they have operated outside the regulatory scope applied to credit providers.
In addition, Fatfish said the Smartfunding service will be operated through a capital-light model, where financing (and assumed risk ) for the loans will be provided by third-party financers.
That’s a similar model to ASX-listed loan providers in the B2C and B2B space, who partner with larger third-party lenders to reduce wholesale funding costs.
While the funding partners assume the risk of the loan (and the reward from interest revenue), capital-light loan providers can generate transaction fees by applying their technology to boost customer on-boarding.
FFG said Smartfunding has a unique opportunity to build its lending model from its Singapore base, given the country’s status as a south-east Asian finance hub.
While its new platform appears to be a lending service, FFG noted the “BNPL business model has seen success in Australia”.
In that context, FFG’s value proposition is to “assist its investee companies to identify and launch new business strategies that have been proven in other markets”.
Accompanying the announcement, FFG said it’s aiming to acquire a direct 19.9 per cent stake in Smartfunding for a consideration of $544,950.
To fund the investment, FFG announced a plan capital raise via the issuance of 11,594,680 shares priced at 4.7c.
Along with its direct investment, FFG said Smartfunding shareholder Shariffudin bin Mohamed Raffi has given the company a six-month option to purchase an additional 10.1 per cent stake in the company for $250,000.