Strong growth, global partnerships and a conservative valuation; why the My Rewards IPO offers compelling value for investors
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My Rewards’ IPO has been well-timed to coincide with a key inflection point in its broader growth strategy.
With over 20 years in operations and more than 4,500 partners, loyalty rewards platform My Rewards International (ASX:MRI) has established a strong foundation as it heads to the ASX boards in pursuit of its next phase of growth.
That established market position is reflected in its pre-IPO prospectus numbers; a mature business that generates almost $30m of annual revenues through a multi-channel customer base across ecommerce and employee benefits reward programs.
Speaking with Stockhead ahead of the listing, company chairman David Vinson said MRI’s established market footprint across multiple verticals gives it a competitive advantage, in a market where a number of ecommerce stocks are facing Omicron-linked logistics challenges.
Vinson said a feature of the way My Rewards has built its platform is by creating established markets through both online and in-store channels.
That footprint allows the business to “cater to both sides of the retail market”, reducing its exposure to supply-chain bottlenecks.
“I think some consumers are seeing that just because it’s ecommerce, that electronic component doesn’t necessarily mean instant delivery,” he said.
“That’s an issue in the market right now but for us, we’ve got over 4,500 retail partners with that combination of in-store and online.
“So we’re providing in-store savings for multiple retailers, where consumers can use, say a gift card from our platform and get instant purchases without having to wait for delivery.”
Assessing the Australian economy’s emergence from the pandemic, Vinson said My Rewards is also doing strong business through its employee benefits platform – first integrated through its acquisition of Pegasus in 2009 – as the labour market shows significant signs of tightening up.
“Competition for workers is increasing, which is making it harder to retain talent.”
“We can see that’s really heightened awareness for our benefits platform now. It’s something that employers can have in the mix to attract and retain employees,” Vinson said.
“So that’s another area where we feel we can adapt and benefit from the current challenges in the market.”
While My Rewards is an established business with strong revenues, Vinson reiterated that the business is coming to market with a targeted and controlled approach to its IPO.
MRI has raised $5m from investors at 20c per share, and it raised capital at a materially lower multiple than compared to other fintech and/or ecommerce stocks in the market.
“We’ve always gone in with what we thought was a fair and conservative valuation,” Vinson said.
From a metrics point of view, MRI and its advisory team have valued the business at around 1.3x pro-forma revenues.
“If you look across the market, there were companies valuing their business at 5-6x, 10x revenues or even higher, and we’ve seen those valuations come off,” Vinson said.
“So it was important to us that we didn’t take advantage of those market conditions. Our valuation point has always been lower — we want to be realistic and build value for shareholders by coming to market with a more conservative valuation.”
With funds raised from its IPO, MyRewards has a targeted strategy to deploy capital in key growth areas as it scales up from the domestic market to pursue an international growth strategy.
Looking ahead to 2022, Vinson said a key operational focus of the business is to leverage its strategic partnership with Ria, the global money remittance platform that processes annual revenues of over US$1bn.
While its domestic business continues to grow, the company is executing its global rollout through Ria, starting with entry into the Malaysian market which will mark the first step in a broader push across the Asia-Pacific.
As part of its IPO, MRI has also agreed to acquire Perx Rewards in a $1.2m deal.
Founded 15 years ago, Perx (which operates as Infinite Rewards) has grown over the last few years with revenues of $12.5 mil in 2021.
Vinson said that among other benefits, the expanded group will add to MRI’s broader profile as it consolidates its leading position in the domestic market.
And once listed, its access to public capital markets will give it additional flexibility for growth in the years ahead.
“Ultimately the things we’ve never wavered on are the key growth metrics outlined in our prospectus, and we’re going to deliver our strategy against that plan,” Vinson said.
“We’re on track to launch our retail B2C platform, leverage our market position and data analytics to build out an AI — essentially everything we flagged in the prospectus, there’s no change.”
“So with our conservative valuation and articulated strategy, we think we’re giving investors a good opportunity to participate in this growth story.”
This article was developed in collaboration with My Rewards, 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.