Spenda Ltd has agreed to sell its invoice finance portfolio to Grapple Invoice Finance Fund Pty Ltd for $2 million, subject to portfolio performance.
The transaction is expected to strengthen Spenda’s balance sheet, reduce risk exposure and enhance revenue generation through a new referral agreement with Grapple.
“The sale of the loan book is the first step in the company’s restructuring its balance sheet and releasing capital whilst realising value through bringing forward future cashflows," Spenda managing director Adrian Floate said.
"With the software now capable and proven in managing financing flows, credit processes, risk management and payment reconciliation, the company can now enable third-party lending products to be onboarded on to the platform via revenue sharing agreements as executed with Grapple.
“Further, the company has removed the capital constraints associated with being the counterparty to loan/financing-related product offerings. We look forward to working with Grapple in growing the invoice finance loan book to the benefit of both parties.”
The sale will release $2.3 million in first-loss capital, in addition to the $2 million sale proceeds. This move effectively recapitalises Spenda’s balance sheet, providing an additional $4.3 million in available working capital while generating operational savings of approximately $600,000 per annum.
Higher margins and lower risk
By divesting its invoice finance loan book, Spenda will transition its income stream towards bundled Software-as-a-Service (SaaS) and payment services, increasing margins while eliminating lending and credit risk.
Although the sale will result in a reduction of approximately $50,000 per month in gross profit, cost savings and the growth of other product lines are expected to offset this impact and enhance overall operating margins.
Referral agreement with Grapple
As part of the deal, Spenda and Grapple will enter into a referral agreement, allowing Spenda to earn revenue from new customers referred to Grapple.
The 24-month referral agreement was effective from November 2024. Under the terms of the agreement, Grapple will pay Spenda a referral commission equivalent to 100% of the Net Interest Margin (NIM) for the first year and 50% of the NIM for the second year on all successfully referred deals.
As part of the loan book sale to Grapple, key Spenda employees responsible for the ongoing management and servicing of the loan book will transition to Grapple upon completion.
In connection with the sale, Spenda will incur a break fee of $170,000, representing 1% of the facility limit, payable to its credit provider for the early termination of the facility.
“This transaction allows both businesses to concentrate on respective core competencies and further drive the uptake of Grapple’s market-leading digital and real-time invoice financing platform,” Grapple CEO and founder Stephen T. Dawson said.
We look forward to working with Spenda to ensure a smooth transition of the invoice financing portfolio and taking advantage of the synergies offered by the deal.”
Transaction terms and timeline
Grapple will acquire the portfolio for $2 million, structured as:
- $500,000 upfront at completion.
- $1.5 million in deferred payments, including 10 monthly instalments of $75,000 from April 2025 and a potential $750,000 balloon payment by March 2026, subject to portfolio performance.
Completion of the transaction is expected by February 28, 2025.