Beforepay Group Ltd (ASX:B4P) is the latest financial stock to hit the ASX, joining the boards under the ticker ‘B4P’.
The pay-on-demand lender raised $35 million in its late-season initial public offering (IPO), giving investors a chance to buy in at $3.41 per share.
With 10.3 million shares issued thanks to the IPO, Beforepay hit the deck with a $158.4 million implied market capitalisation and a $114.7 million enterprise value.
Like the fintech darlings that have come before it — think monoliths like Afterpay Ltd (ASX:APT) and Zip Co Ltd (ASX:Z1P) — Beforepay’s business model hinges on one key offering.
The consumer finance stock allows users to access a portion of their next pay packet ahead of time for a 5% fixed fee.
B4P by the numbers
Beforepay closed out its $35 million IPO in mid-December, raising capital to further expand its business offering in Australia.
The proposed use of funds following the IPO.
Upon listing today, the pay-on-demand lender also revealed some key statistics from its December trading quarter.
Compared to the previous corresponding period, B4P more-than-quadrupled pay advances and nearly tripled its cumulative active user metrics.
The financial stock also more than halved its default rate and saw the average pay advance it dished out more than double.
Beforepay’s December quarter highlights.
Beforepay plans to release its interim results for FY22 on February 28.
The company’s cash balance as of June 30, 2021, was slightly more than $50 million.
Targeting pay-on-demand industry
Founded in 2019, Beforepay targets a substantial wedge of the Australian workforce with its online salary lending offering.
To give investors a sense of the broader sector, the fintech lender recently commissioned a pay-on-demand industry report from market research firm Frost & Sullivan.
“Pay-on-demand products, such as that offered by Beforepay, are an innovative concept in the consumer finance market, providing an alternative to other approaches for individuals to access short-term finance, such as credit cards, bank overdrafts or payday loans,” the report stated.
“Pay-on-demand supports individuals to manage their monthly cashflow by providing immediate access to upcoming pay which can be used for any purpose, assisting individuals who may otherwise face challenges in meeting expenses before their next pay date.
“Beforepay currently solely operates in Australia. However, in other markets such as the United States and United Kingdom, many individuals are facing similar financial challenges as in Australia.
The report also detailed how fintech solutions like pay-on-demand are taking off with younger demographics.
With more than 6 million millennials in Australia’s employment force — and a further 11 million in the UK and 72 million in the US — Beforepay is targeting an audience of income earners seeking extra flexibility when managing their pay packet.
“Globally, millennials are the age cohort with the highest aggregate income, estimated at roughly US$18 trillion globally and overtaking the aggregate income of Gen X around 2020,” the Frost & Sullivan report stated.
The Beforepay team
Heading up the Beforepay board is Big Four bank veteran Brian Hartzer.
In the past, the B4P chair and independent non-executive director served as the Westpac Banking Corp CEO from 2015 to 2019.
Hartzer has also served as the Royal Bank of Scotland Group’s retail and wealth management chief executive.
Prior to that, he held several senior leadership roles at ANZ Banking Group (ASX:ANZBY), including running the retail arm of the bank.
Speaking to Beforepay’s debut in a market announcement, Hartzer said: “I’m delighted to see Beforepay list on the ASX today.
“The strong support we’ve received from investors is testament to the growth Beforepay has delivered as a startup and the opportunity ahead of us as a public company.
“On behalf of the board, I’d like to thank our existing shareholders for their support during the early stages of our business and welcome the many new shareholders, whose investment in Beforepay is a vote of confidence in both the pay-on-demand industry and Beforepay’s future growth.”
Joining Hartzer at the helm is CEO Jamie Twiss — another Westpac ex-pat.
Twiss served as chief strategy officer and chief data officer in his time at WBC and brings more than 20 years of strategy and financial services experience to the role.
The CEO stated today: “This is an exciting step for Beforepay and for the emerging pay-on-demand industry.
“Over the last year-and-a-half, we’ve seen that pay-on-demand offers people a better, more customer-friendly way of managing their finances, and the strong growth we’ve seen — tripling in size over the last year — shows that people are responding.
“The funding we’ve raised through the IPO will enable us to accelerate our growth in Australia even further and to explore opportunities overseas as well.
“I feel confident we have the strategy, the team and now the resources to reinforce our position as the leader in this fast-growing category and to significantly expand the business.”