Sezzle flags Goldman Sachs tie-up as BNPL rally continues
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A Sezzle (ASX:SZL)/Goldman Sachs tie-up is the latest piece of news-flow for BNPL investors, after the company announced a new funding facility this morning.
Shares in the company are back over $11 for the first time since August, after a strong one-month rally.
The stock has now climbed by around 85 per cent in 2021 after starting the year at $6.17 (and it’s up by around 3,000pc from post-crisis lows of ~40c).
The 2021 gains follow quarterly momentum in mid-January, when the company flagged Q4 underlying merchant sales (UMS) of $419.8m, up >40pc from the September quarter and >200pc y/y.
SZL said it’s expanded its receivables funding facility to $US250m, replacing the previous funding arrangement of $US100m.
Under the terms of the deal, Sezzle will have access to an up-front receivables facility of $125m, with the option to extend it to $250m.
SZL’s expanded funding deal is with Connecticut-based Bastion Consumer Funding and US investment bank Goldman Sachs, the company said.
While a breakdown of the funding arrangements wasn’t provided, Sezzle’s funding partnership with Bastion goes back to November 2018 when Bastion first provided a $30m credit facility.
That funding facility was terminated in November 2019, and Bastion entered into a new $100m funding facility along with two other lenders — Atalaya Asset Income Fund IV LP, and the Hudson Cove Credit Opportunity Master Fund.
The term is for a period of two years and four months (28 months), extending Sezzle’s funding well into 2023 compared to the previous maturity date of May 2022.
The revised facility has various covenants and warrants in place on behalf of the lenders that are “typical of a similar receivables warehouse facility”, Sezzle said.
Extending the duration and amount of the funding facility gives Sezzle a liquidity cushion to pursue its growth plans while also lowering its funding costs, the company’s Chief Financial Officer Karen Hartje said.
The company’s strong share price gains in 2021 has seen it join the likes of fellow BNPL players Zip Co (ASX:Z1P) and Afterpay (ASX:APT), as investors continue to view BNPL has a new platform sector that will revamp the way payments are made and take market share away from credit card providers.