Digital lender SocietyOne is looking to capitalise on buoyant markets and eyeing a potential ASX float this year as the Rupert Murdoch, Kerry Stokes and James Packer-backed company looks to fund increased lending and bolster product development.
The eight-year-old fintech says the toal value of loans on its platform have now surpassed $1 billion with business conditions bouncing back to pre-pandemic levels thanks to a wave of government stimulus that has supported consumer confidence.
Chief executive Mark Jones said he expected a “pretty robust” year ahead, pointing to “booming” demand for loans for purchases such as cars, or upgrades to home offices. He also said the company was continuing to finance more of its loans through warehouse funding — lines of credit from wholesale lenders such as banks — which provided a cheaper source of funds than its original model based around peer-to-peer lending.
As SocietyOne announced it would lift its maximum loan size to $70,000, Mr Jones said it saw a market in providing more products, including mortgages in about one year’s time.
“In Australia, for us, we’d like to be able to help customers with a mortgage but the size of the balance sheet required to do that means we’re just working through how we could do that in partnership with someone,” he said in an interview.
These plans to develop more products, and the move to rely more heavily on wholesale funding, will require capital, and after rivals Plenti and Harmoney floated in late 2020, an initial public offering (IPO) is one possibility. He added it had not yet made a final decision to float, or when it would occur.
“All in all we’re probably looking for around $50 million of capital over the next 12 to 18 months to grow the business with new products and transition to warehouse funding,” Mr Jones said.
“That kind of capital would probably require some kind of event, and so it’s probably more likely than not that we would be looking to tap significant capital, maybe an IPO, later in the year.”
While the pandemic initially slowed demand for loans, Mr Jones said there had been a bounce-back and its revenue rose by about 30 per cent in 2020, to slightly more than $50 million, while its costs fell 15 per cent. The business, which is not yet making a profit, also benefited from loan losses and delinquencies falling to record lows, helped by government stimulus.
SocietyOne launched in 2012 and has a collection of high-profile shareholders including Westpac’s Reinventure fund, Mr Murdoch’s News Corporation, Seven West Media, and investment businesses controlled by Mr Packer and Mr Stokes.
Reinventure managing parnter Simon Cant said he believed SocietyOne’s manageent team had struck the right balance between deep financial services experience and techological know-how, and the business was performing “extremely well.”
“We’ve got very strong support from our wholesale funders and we had a very strong performance through COVID,” Mr Cant said.
Source: Thanks smh.com