Sezzle to ring the ASX bell at midday after seeing heavy demand for its $43.6m funding round
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The current crop of buy now, pay later (BNPL) payment platforms listed on the ASX are about to get a new competitor.
US-based Sezzle (ASX: SZL) will hit the boards at 12pm AEST, having raised $43.6m in an over-subscribed IPO (advised by Ord Minnett) round at $1.22 per share.
The company said it saw strong demand from institutional and retail investors, and pre-market trading activity is pointing to a strong start this afternoon.
Sezzle’s strategy is focused is on the North American market, where it will go head-to-head with local market leader Afterpay (ASX: APT).
It will be the second BNPL listing on the ASX this year, after Splitit (ASX: SPT) in late-January. Splitit listed at 20 cents and immediately roared higher to a peak of $2, before falling back to its current level of 65 cents.
Other competitors in the space include Zip Co (ASX: Z1P) and Latitude Financial, the unlisted financial services company run by former Australia Post CEO Ahmed Fahour.
Sezzle is targeting the US retail market with the standard BNPL model, where merchants pay a fee on each transaction and the buyer repays the amount in four instalments.
According to Sezzle’s prospectus, the number of active merchants rose to 5,021 in June, a gain of 52 per cent from the March quarter.
Customer numbers rose 59.3 per cent to 429,898 while merchant fees — the core driver of revenue — climbed to $2,128,617 for the June quarter, a gain of 49.2 per cent.
Sezzle says it will use the funds raised to drive growth in its retail merchant base, build out customer support and improve product capabilities.
Following the early success of Afterpay, many investors are now banking on the success of its US expansion to drive continued growth.
And speaking with Stockhead, Sezzle CEO Charlie Youakim said the company stands to benefit from some home-ground advantage.
“I think because we’re a US-based company, our view is we have a better feel for the US customer. We’ve been there and done that and understand how people feel about credit,” Youakim said.
“For one thing, everyone knows their credit score, which is totally different from Australia. And our product is a vehicle to engage with the whole credit ecosystem and financially empower the next generation of consumers.”
Youakim said the IPO funds will be deployed to scale up its merchant base, where it will focus on a shift from small-to-medium enterprises to chain stores.
“The main focus for this fund raise is to take that capital and win the North American market,” Youakim said.