Bank of Queensland taps Goldman Sachs to advise on quest for BNPL firm Humm Group

The Bank of Queensland has engaged advisers as it sizes up buy now, pay later firm Humm Group.

Bank of Queensland is considering buying Humm Group. Picture: NCA NewsWire/Jono Searle

The Bank of Queensland has engaged advisers as it sizes up buy now, pay later firm Humm Group – which this month said it had received multiple proposals for all or part of its business.

Sources with knowledge of the BoQ discussions said they were at an early stage, although the bank has brought in Goldman Sachs to assist in the proposal.

Humm – which sells business and consumer BNPL products – this month said it had “received approaches from third parties to acquire all or part of (the company)”. It did not disclose who had made the proposals.

The Australian’s DataRoom column has already reported that Latitude Financial, one of the country’s largest consumer financial services firms, had separately expressed interest in Humm’s non-commercial leasing business.

BoQ and Humm declined to comment on Wednesday.

Humm has a market value of about $445m, but the company estimates – and told an investor day in November – that the value of its combined businesses would exceed $1bn if compared to the multiples its peers trade at.

Announcing the approaches on December 20, Humm told the ASX that “the company intends to engage in relation to these proposals, to determine whether they are capable of becoming definitive offers that are in the best interests of the company and its shareholders. There is no assurance that any transaction will occur.”

It has appointed Flagstaff Partners and Minter Ellison to advise on the potential offers.

Humm already has a number of partnerships in place, including with BoQ rival Westpac, MasterCard, the Velocity frequent flyers program and Air New Zealand.

The company, until this month chaired by founder Andrew Abercrombie, rebranded from its original FlexiGroup name in August 2020, raising $140m as it began an aggressive expansion into the buy now, pay later sector.

At the time, it had 2.1 million customers, similar to larger rival Zip Co, and had signed up 56,700 retailers. Despite this, its shares have not had the same outsized performance as its buy now, pay later rivals such as Afterpay.

In October, Credit Suisse equities analyst Marco Vissers told clients that Humm management expected BNPL services to account for about 40 per cent of gross income in the medium term, with the British and Canadian business contributing at least a quarter of that income.

“Management noted it expects BNPL volumes to benefit from the easing of restrictions and return to in-store shopping throughout (the 2022 financial year), with the majority of volumes coming from larger-ticket items more commonly purchased in-store,” Mr Visser wrote in a note.

“Management pointed to a solid pipeline of BNPL partnerships, being a mix of licensing and loyalty program opportunities.”

Both Humm and BoQ have previously flagged consolidation in the BNPL later sector.

The bank’s chief executive, George Frazis, this year said it would be “really important to partner up with a leading player”.

Latitude has already launched its own BNPL product called Latitudepay.

In a lengthy paper, Citi analyst Siraj Ahmed said Latitudepay’s website had shown strong growth – an increase of 86 per cent year on year to November.

Humm’s, however, had declined 29 per cent for the same ­period, Mr Ahmed wrote, although the rate of decline slowed slightly in comparison to the year to September. “Note that Humm’s website visits could be understated given there are two different URLs used by the company,” he wrote in a clients note.