A new buy now, pay later (BNPL) player made its ASX debut today, listing its shares at an initial public offer (IPO) price of $1.20.
Moments after the shares began trading, however, the Payright Limited (ASX: PYR) share price tumbled 17% to as low as $1.00. It has since recovered to $1.06, down 12%, at the time of writing.
About the Payright IPO
Payright was founded in 2015 by co-founders and current joint chief executive officers Myles and Piers Redward. Together, they have more than 30 years’ experience in the retail finance and payments sectors.
Launching into a payments sector that is starting to get overcrowded, Myles Redward told Motley Fool earlier this week that Payright had a strong point of difference.
He said his company targetted a different consumer compared to most other BNPL providers. Rather than using BNPL to buy clothing or small appliances, Payright users are paying for bigger purchases like home renovations, health and beauty, or even education fees.
These purchases are usually between $1,000 and $20,000, with an average transaction value of approximately $3,000.
Education contributes 34.1% of the gross merchant value that runs through the Payright system – the highest of any sector.
Payright said its analysis indicates that 55% of consumers want a BNPL payment option for purchases exceeding $1,000, and 43% say having a BNPL option at or above this price-point would help them with budgeting.
By the numbers
According to the prospectus presented to investors, Payright has a network of approximately 2,400 merchants and more than 30,000 customers across Australia and New Zealand.
The company told investors that Payright has achieved significant growth in FY20, with revenue and gross merchandise value (GMV) increasing 188% and 64% respectively.
The company’s customer base also rose by 115% for the same period.
However, Payright is yet to make a profit, with losses in the last three fiscal years. In FY20, the company reported a loss of $8.1 million on a top line revenue of $9.85 million.
The IPO raised $18.5 million, with the company issuing 15.4 million shares for an implied market value of $107 million.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post BNPL debutant Payright (ASX:PYR) share price tumbles 12% on IPO appeared first on The Motley Fool Australia.
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