Tech: Novatti takes on a further $1.1m investment for its migrant-focused banking service
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Shares in listed fintech Novatti Group (ASX:NOV) had a bounce this morning, after the company announced a strategic investment from Australia Fintech Investment Group (AFIG).
The deal is in connection with prospective banking services that Novatti wants to bring to the market, pending regulatory approval.
As part of the deal, AFIG has invested $1.1m into a Novatti subsidiary via a non-interest bearing convertible note with a maturity date of March 31, 2020.
At that price, Novatti says the investment gives its prospective banking unit a pre-money valuation of $20m.
Shares in Novatti jumped almost 20 per cent at the opening bell to 22c in morning trade, before cooling off slightly.
Novatti’s deal with AFIG is another step towards the broader strategic goals of the China-adjacent fintech.
Along with the $1.1m investment, the two sides have also set out a memorandum of understanding (MOU) for AFIG to provide a “sophisticated consumer digital wallet app”, based on existing technology in the Chinese market.
The agreement will see AFIG contribute working capital and intellectual property to the venture. In return, the project is reliant on Novatti to leverage its Australian operations in order to obtain the relevant licences.
Novatti is awaiting confirmation from the domestic bank regulator, APRA, for approval of a restricted authorised deposit-taking institution (RADI) licence that it applied for last November.
The company said its application is “largely finalised, with final submissions for approval of the licence underway”.
AFIG’s convertible note will convert to shares in the Novatti subsidiary if approval is granted at any time before March 31. And if it does receive approval, Novatti says its aim is to become a “leading migrant services bank”.
A presentation from the company in February this year said Australia’s migrant population sends around $9 billion per year overseas, around $7 billion of which goes to China and India.
In addition to its prospective banking servies, Novatti’s core business is as a payments processing platform. The company has existing agreements with bill payments service chinapayments.com, as well as the Bank of Shanghai and Alipay.
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