Fintech lender MONEYME successfully launches $37 million cap raise to repay debt and drive growth

MONEYME has successfully launched a $37 million capital raise as it works to build on growing profit and reduce corporate debt.

Non-bank lender MONEYME (ASX:MME) has launched a fully underwritten $37 million conditional equity placement.

At 8 cents/share issuing ~462.5m new fully paid ordinary shares, the placement represents a 24% discount to the last traded price on March 20, 2023 of 10.5 cents/share. The placement is subject to shareholder approval, with an extraordinary general meeting planned for May 2023.

MME said most of the capital has been committed by existing and long-term shareholders including Somers Limited, which trades on the Bermuda Stock Exchange, and Perennial Value.

Somers is a substantial shareholder in other financial services companies Resimac Group (ASX:RMC) and Thorn Group (ASX:TGA).

Share purchase plan to follow

A non-underwritten share purchase plan (SPP) for up to $5m at 8 cents/share is intended to follow the successful completion of the placement.

MME said the planned SPP is to be offered to existing eligible shareholders for up to $30,000 each of fully paid shares, subject to shareholder approval of the SPP.

Proceeds to repay corporate debt

MME MD and CEO Clayton Howes said support from existing investors despite extremely tight capital markets is a sign of confidence.

“It underpins their confidence in the company’s profitable business model, unique tech-driven advantages, and ability to execute on its strategic vision,” he said.

“The proceeds from the equity raising will be used to repay the short-term component of our corporate debt facility that was used to finance the Society One acquisition, and in turn remove the associated concerns that contributed to the significant downward pressure on our share price recently.

He said the repayment will also support MME’s focus on increasing profitability through ~$7m in annualised savings.

“The raise will also further strengthen our balance sheet and unrestricted cash balance and support measured growth and the pursuit of the significant opportunities ahead of us.”

Well positioned for growth

The ASX announcement included a trading update for 2H23 so far, which revealed strong profit growth, with $7 million NPAT delivered in just two months across January and February 2023, following $9 million in H1 FY23.

“With over $16 million in NPAT year-to-date, and the significant cost-savings associated with repaying our short-term debt, we project a strong year for the business,” Howes said.

MME also delivered $42 million in gross revenue over the two months and said the average credit quality of its loan book had continued to increase, in line with its focus on higher credit quality borrowers.

As part of its measured growth strategy going forward, MME said it will continue to focus on:

Driving margins and profitability through a disciplined credit strategy and cost control
Exploration of opportunities for tech licencing, white label solutions and forward flow partnership arrangements to increase revenue and returns
Reducing customer acquisition costs through customer cross-sell opportunities
Optimising funding structures to increase capital efficiency, with a term transaction planned to refinance SocietyOne loans from two warehouses.

H1 FY23 saw MME expand its product range with MONEYME Credit Score, which attracted more than 37,000 users during its trial phase.

In line with the focus on lowering customer acquisition costs, Howes said at the time of the product launch that he was confident the app-based, free credit score service will generate significant customer and cross-sell value for the group going forward.

This article was developed in collaboration with MoneyMe, 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.