Fintech lender MONEYME completes $37 million capital raise, positions for sustainable growth in FY24

MONEYME has completed its $37 million capital raise to pay down corporate debt, supporting increasing profitability and sustainable growth in FY24.

Non-bank lender MONEYME (ASX:MME) has completed a $37 million capital raise as it moves to strengthen its financial position amidst growing economic volatility.

The bulk of the funds from the capital raise will be used to partially pay down MME’s corporate debt facility, which the company said will deleverage the business, reduce risk, and deliver significant interest cost savings.

The company announced the fully underwritten share placement at 8 cents/share on March 30.

During the company’s extraordinary shareholder meeting (EGM) earlier this week, shareholders voted overwhelmingly (>99%) in favour of the $37 million placement, which included a $4 million contribution from director Scott Emery.

MME’s CEO Clayton Howes said the successful placement marks an important milestone.

“The approved $37 million placement allows us to proceed with the planned paydown of our corporate debt facility, strengthening our balance sheet and supporting our profitability through significant costs savings.”

“It concludes our strategic capital initiative, relieves the uncertainty that has been weighing on our share price, and positions our business for sustainable and profitable growth in FY24 and beyond.”

Howes said MME will also launch a $5 million share purchase plan for retail shareholders.

“We are pleased to offer retail shareholders the opportunity to participate at the same price via our planned $5 million Share Purchase Plan (SPP) – a price that we firmly believe represents a significant discount to the value created in our business and the opportunities ahead of us. The SPP will be open, with details made available to shareholders, on 24 May.”

Corporate debt paydown

With the capital raise formally completed, MME said it will use approximately $32 million to pay down the portion of its corporate debt facility that was used to finance the SocietyOne acquisition.

With the short-term component of the corporate debt facility repaid, terms of the debt facility will be improved, delivering annualised cost savings of circa $7 million.

MME said the significant reduction in interest costs will support its profitability in FY24 and beyond.

During the EGM, Howes said the partial repayment will also deleverage the business and stabilise its capital structure for future growth, while reducing associated risks, including its exposure to interest rate volatility.

The company has projected FY23 gross revenue of more than $220 million and more than $16 million in statutory net profit after tax (NPAT) delivered YTD at the end of the third quarter, making MME one of few ASX fintechs delivering statutory profits.

The company recently released its Q3 FY23 results, where it increased gross revenue YoY by 75% to $61 million, while the company’s ongoing focus on margin protection resulted in a net interest margin of 13% in the quarter.

MME is also continuing to see improvement in its credit profile through an ongoing focus on credit risk management and targeting of higher credit quality borrowers. The company ended Q3 FY23 with an average book Equifax score of 718.

With a current market cap of circa $30 million, MME is trading at a significant discount to its loan book value of $1.18 billion and, with the company’s strong performance in FY23 to date, at around 2x NPAT.

During the EGM, Howes said the completion of the capital raise and planned corporate debt repayment is expected to relieve the downward pressure on MME’s share price, and that the company’s strategy will work to enhance shareholder value.

“Our focus on strengthening the balance sheet, optimising our funding structures, and driving profitability will contribute to a stronger foundation for future growth – and we are confident that this will ultimately translate into increased shareholder value over time.”

Securitisation deal bolstering growth prospects

On 17 May, MME also announced it had priced a $150 million term securitisation transaction for unsecured and secured SocietyOne personal loan assets, led by National Australia Bank (NAB) and Westpac Institutional Bank, with settlement due today, 19 May.

Howes said that the deal will help to bolster MME’s profitability.

“It’s great to see our securitisation funding platform operate and deliver a third term transaction for the group to further facilitate profitable returns and stability in the current challenging economic environment.”

The securitisation deal is the company’s first since it acquired SocietyOne in March 2022, and the two senior traches of the deal were rated Aaa (sf) by Moody’s.

“The successful deal demonstrates MoneyMe’s capital markets capabilities and strong funding position, underscored by a Moody’s Aaa (sf) rating for the senior tranches, reflecting the high quality of the underlying assets.”

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.