Debt collection fiirm Credit Clear raises $9m, eyes ASX listing

The debt collection fintech chaired by Gerd Schenkel and backed by Paul Little is set to list on the ASX after a $9m capital raising.

Credit Clear’s managing director Brenton Glaister with co-founder Lewis Romano. Picture: David Geraghty

The debt collection fintech chaired by former NAB and Tyro Payments executive Gerd Schenkel and backed by billionaire Paul Little is set to list on the Australian Securities Exchange after completing a private $9m capital raising to purchase an associated debt recovery agency.

Credit Clear’s recent purchase of Credit Solutions, which has debt-collection contracts with a large number of Top 50 Australian companies, will give the merged group the ability to collect earliest-stage debts (less than 30 days) through to more delinquent debts (more than 90 days).

Credit Solutions’ major customers include Transurban Group, South East Water, Beyond Bank and Toyota Financial Services.

Following the deal, Brenton Glaister, former managing director of Credit Solutions, has assumed the role of managing director of the combined group and the firm is also set to appoint two new directors ahead of its looming IPO.

One is Marcus Price, best known as the founder and now former chief executive of e-conveyancing group PEXA, which is now owned by Link Market Services, Commonwealth Bank and Morgan Stanley after they paid over $1.5bn for the firm in November 2018.

“I enjoy growing new technologies and new businesses. Credit Clear is a different scale business to PEXA but it also has international reach,’’ Mr Price said.

“The old model of collections was ‘Put it over to another department or sell it to someone else’.

“Now companies will need to think more about the impact they are having on their end customer.

“Credit Clear allows you to customise your messaging in a way that is acceptable to the millennial generation.”

It is understood Credit Clear has also secured former Dunn and Bradstreet chief executive Christine Christian as a director ahead of its IPO, which is expected to raise fresh capital of around $5m following the recent $9m private raising. The latter raising, handled by Bell Potter principal Hugh Robertson, was led by Alex Waislitz’s Thorney Investment Group and was supported by Mr Little, Monadelphous chairman John Rubino and Melbourne IVF founder John McBain.

Credit Clear is projecting revenue of $18m in 2020, up from $14.6m a year ago, and is expected to generate positive pre-tax earnings in 2020.

“There is an opportunity to continue to scale this business. We seen an opportunity for this merged company not just in Australia, but internationally,’’ said co-founder Lewis Romano.

He said the float would also provide a liquidity event for some foundation investors. One of the biggest selling points of Credit Clear is that it uses technology to help companies engage with the more than 2 million Australian consumers struggling with personal debt.

The firm automates the debt collection process and uses artificial intelligence to determine what time of the day and through which method of communication — most notably via Facebook Messenger, SMS or email — a debtor prefers to be reached over paying their overdue fees.

According to the Australian Securities & Investments Commission data, 18.5 per cent of consumers have problematic credit card debt indicators. Last year the departments of Treasury and Prime Minister and Cabinet co-operated with Westpac on a trial to send text messages to customers reminding them to repay debts.

The study showed the practice increased credit card repayments by about 28 per cent, or $134 on average.

In recent years consumer legislation has also forced corporations to deal more carefully and responsibly with debtors.

“Corporate Australia has also worked out at a fairly high level that the compliance and training costs of establishing back office operations in the credit area mean it is more efficient to outsource them to companies like us,” Mr Glaister said.

“We are currently replacing 10,000 phone calls a week with the Credit Clear app that is already achieving higher recovery rates. We have access to a bunch of senior tech people that are keen to change the face of Australian collections.”

But he said Credit Clear was also helping companies retain and even increase their customer base through the debt collection process.

“For example for one large company, we have 80-90 customers signed up for them in addition to dealing with their debts,’’ he said.

“For electricity providers, for every one message that we send to a consumer, they are sending 25 prior. We want to work with them to be involved in that 25 and reduce it for them.”