Splitit rounds out BNPL capital raising deluge with $90m placement

Buy now, pay later (BNPL) company Splitit (ASX:SPT) has gone back to the capital markets this morning, announcing a $90m share placement.

The company said the extra cash would be used to fund “additional sales and marketing, and further investing in product and technology development”.

The placement was backed by a cornerstone investment from US fund Woodson Capital. Splitit will raise the money by issuing 69.2 million new shares at $1.30 apiece, with plans to raise another $10m via a share purchase plan to eligible retail investors.

News of the deal saw SPT shares climb above $1.50 in morning trade — a premium of around 15 per cent to the raising price.

Splitit (ASX:SPT) share price chart

Liquid markets

In tapping equity markets for additional funds, Splitit is following in the recent footsteps of other BNPL competitors as valuations in the sector surge higher.

Splitit offers a similar instalments structure to the others, except its target market is credit cards. The company’s technology functions as an extra “layer” on customer credit cards, giving them the option to split their purchase into monthly instalment payments for a period of up to three years.

Shares in the company treaded water between 50c and $1 for the better part of a year following its head-turning debut in January 2019, before the stocked ripped higher in June on news of a partnership agreement with Mastercard.

Today’s $90m deal follows a marquee capital raise by Afterpay (ASX:APT) in early July, which brought in about $900m from institutional investors at more than $60 a share, as co-founders Nick Molnar and Anthony Eisen sold down around $250m worth of stock.

At the time, analyst valuations on the stock ranged from $25 (UBS) to more than $100 (Bell Potter). Afterpay shares are currently trading at around $70.

That was followed by an ~$80m placement by US-based competitor Sezzle, which found strong demand from institutional investors after the company’s stock price rose more than 1,800 per cent from its March lows.

Back in early June, Zip Co (ASX:Z1P) announced plans to raise up to $200m from US-based Susquehanna International Group, via a $100m convertible note facility and a $100m warrants offer. The deal accompanied the announcement of Z1P’s share-based acquisition of US BNPL target QuadPay Inc.

Zip Co said the additional funds will be used to “help accelerate growth in the US and other core markets”.

And rounding out the capital markets activity, OpenPay (ASX:OPY) secured a $33.7m placement to sophisticated investors on June 4, via the issuance of 14.1 million shares at $2.40 (the stock is now trading at around $3.80).

The rush for capital has accompanied a torrid period of growth and investor excitement for the sector following the bout of panic selling in March.

Upon receiving shareholder approval, Splitit will issue 34.6 million shares to raise approximately $45m under tranche one of the scheme before proceeding to tranche two.

As part of tranche two, four directors of the company — including chairman Spiro Pappas and CEO Brad Paterson — have announced plans to subscribe for additional shares to the value of around $1.8m.