Harmoney declines on debut

Digital personal lending group Harmoney closed lower on debut despite beating the bulk of its prospectus forecasts.

Harmoney made its ASX debut on Thursday. Picture: NCA NewsWire / Gaye Gerard

Digital personal lending group Harmoney declined in its ASX debut on Thursday, despite an update showing a dip in loans on repayment pauses and it beating the bulk of its prospectus forecasts.

The New Zealand-based company - which started as a peer-to-peer lender - is backed by shareholders including auction site Trade Me and Heartland Bank.

But the listing saw Harmoney’s shares - which were issued at $3.50 - slide as low as $3.15 in early trading before they recovered some ground to close at $3.45 on Thursday. The soft debut followed a lacklustre ASX listing from non-bank lender Plenti, which tumbled on its first day of trade in September.

Harmoney provides unsecured personal loans of up to $70,000 across New Zealand and Australia. It is focused on an automated and direct-to-consumer model, which also draws on Google bidding technology to help identify and market to customers.

In an update to coincide with its listing Harmoney said loans on COVID-19 repayment pauses declined to 3.4 per cent of its portfolio as at October 31, versus a prospectus forecast at 3.7 per cent.

But the company missed a prospectus forecast by 1 per cent for its loan book to hit NZ$477.65m, citing a weaker Australian dollar compared to its Kiwi counterpart.

Harmoney did exceed prospectus forecasts for total income growth and net profit which printed at NZ$1.6m.

The company’s chief executive David Stevens shrugged off the share price performance and said he saw a big opportunity for Harmoney in the $150bn Australian personal loan market.

“Harmoney is focused on delivering long term returns for its shareholders and is not deterred by short term fluctuations in share price,” he said.

“Having already met and exceeded our loan origination and revenue prospectus forecasts for the four-month period to October, the team is completely focused on delivering our half year numbers in February.

“We are excited about our access to growth capital allowing for more investment in our customer offering, innovation, and potential new opportunities as we scale into 2021. Our board, management and staff are motivated and aligned with shareholders, holding a cumulative 72 per cent stake in the company post listing.”

Mr Stevens - a former Flexigroup executive - also highlighted expectations that loans on repayment deferral would continue to roll off, particularly over the next month, leaving the balance “fairly immaterial” by the year’s end.

He is upbeat on Harmoney’s prospects given the company’s technology focus and a shift by customers to greater uptake of digital channels for loans during the pandemic.

“We feel the market is moving to a direct model and COVID accelerated it,” Mr Stevens said.

While NZ accounts for about 70 per cent of Harmoney’s business, he is eyeing a lot more growth in Australia where the personal lending market is ten times larger.

“My goal is for the Australia business to overtake the NZ business in the next few years,” Mr Stevens added.

He shied away, though, from providing and market share targets for Australia.