• Factory Capital to become cornerstone investor of Finexia and invest $3.73m
  • Funds raised will be used to grow Finexia’s private credit operations
  • Investment firm sees ‘significant potential in Finexia’s private credit strategy and business model’

 

Special Report: Finexia Financial Group has secured a cornerstone investment from Factory Capital GP Ltd through a private placement of $3.73m, which will be used to support the expansion of the company’s private credit operations.

 

Finexia Financial Group (ASX:FNX) has announced investment firm Factory Capital will invest ~$3.73m in the non-bank lender operating in the private credit sector, reflecting its confidence in its strategic vision and growth potential.

FNX, a private credit provider, said the investment is through a placement of 12,460,813 fully paid ordinary shares at a price of 30 cents per share, representing a 20% premium to FNX’s closing share price on 26 August.

The company said the placement will be staged over two tranches:

  1. The first tranche of 10,773,312 fully paid ordinary shares will be issued for ~$3,23m and completed on September 2, resulting in Factory Capital holding ~17.77% of FNX.
  2. The second tranche of 1,687,501 fully paid ordinary shares will be issued for ~$506k and is subject to shareholder approval at the Company’s AGM in early October.

Following the issue of the second tranche, Factory Capital is expected to own 20% of the issued share capital of FNX.

Factory Capital’s CEO Dan Ritchie will be appointed to the FNX board following its AGM.

FNX said Ritchie brings a wealth of experience in financial services, most recently as an executive director and divisional head at Macquarie Bank, where he led Australian equities and co-headed global equities for more than a decade.

 

Funds to scale private credit operations

FNX said funds raised from the placement will be used to further scale FNX’s private credit operations, with a distinct focus on strengthening its distribution and financial management capability.

The company said its relationship with Factory Capital is expected to bolster FNX’s financial position and accelerate the company’s growth ambitions.

In conjunction with a ramp-up in the private credit strategy, FNX said it has made the decision to divest its equities business and exclusively focus its business strategy on private credit.

The details of this divestment will be released to the market in the coming weeks upon finalisation of terms.

Listed on the ASX in 2015 as a securities dealer/licensee, FNX has over the years pivoted and evolved its strategy towards the lending sector.

Focusing on markets and opportunities that major banks have traditionally dominated but have recently abandoned, FNX’s strategy is aimed at becoming the leading private lender to the childcare sector in Australia.

FNX said income generated through lending activities grew by 51% to $11.37m in FY24, marking the strategic pivot to private credit.

During the year, FNX’s total loan book grew by 43% to $166.8m as of June 30, 2024, which the company said is a strong endorsement of its commitment to private credit.

The total loan assets on FNX’s balance sheet grew by 136% to $58.4m, up from $24.7m in FY23, which was attributed to continued momentum in demand for the Finexia Childcare Income Fund from both investors and childcare operators.

 

‘Track record of transforming businesses’

FNX CEO Patrick Bell said the company was thrilled to welcome Factory Capital as a cornerstone investor.

“The Factory Capital team has a demonstrated track record of transforming businesses, accelerating their growth through partnerships, and bringing a wealth of operational and investment experience to the table,” he said.

“Their commitment and confidence in our business strategy is a great endorsement, and we look forward to leveraging our relationship to achieve our long-term goals together.”

Ritchie said he looks forward to joining the board in due course and working to deliver further growth for the business.

“We see significant potential in Finexia’s private credit strategy and business model and are excited to support their growth initiatives,” he said.

 

This article was developed in collaboration with Finexia Financial Group, 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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