Big bets on the buy now, pay later sector

Illustration: Rod Clement

It was just a week ago that Citi analyst Siraj Ahmed boosted his 12-month Afterpay price target forecast to $64.25 a share, up from $27.10 previously.

Likewise RBC Capital Markets lifted its target price to $60 from $29.

However, the sharply revised price forecast from Citi came after the same brokerage downgraded Afterpay in April, at the time predicting weak consumer discretionary spending.

Now we have a raising with Citi partnering with Goldman Sachs to seek $800m to accelerate growth and allow co-founders Anthony Eisen and Nicholas Molnar to sell down some $250m worth of shares.

Coincidently, the new price target in the Citi research compares to the underwritten floor price of $61.75 a share in the institutional tranche of the capital raising.

The timing of the analysts revisions was handy.

Citi and Goldman Sachs will each pocket half of the total management fee payable, equal to 0.3 per cent of the total raise, some $2.4m each.

Margin Call reckons the supportive links between Citi and Afterpay can be traced way back to David Hancock’s camaraderie with Citi’s Luke Randell.

The Afterpay story has certainly been riveting, with traders simply having a ball, just like they did with the tech stocks 20 years ago. And just like those stocks, none of the companies in the buy now, pay later sector have actually made a profit to date.

Despite all the catch-up research announcements, there are still some who don’t believe the wave will last. They don’t necessarily think old-time credit cards are the future, just sceptical about the BNPL business model.

UBS analysts Tom Beadle, Jonathan Mott and Eric Choi are forecasting Afterpay will shed 60 per cent off its share price over the next 12 months, falling back to $25.

Afterpay’s shares have rallied 40 per cent since June 1 and 440 per cent since the March lowpoint. Tencent taking its stake certainly helped, signalling ­Chinese interest, and there’s whispers of further foreign interest, but it’s not likely to come easily from the Chinese investors, given heightened federal government takeover caution.

Maybe the Japanese fancy a punt.

While the overnight $650m institutional bookbuild has ended positively, there’s a few weeks ahead of trading before we see the success of the $150m raising through the share purchase plan for retail shareholders.

Blackmore moving

Their new Bayview home is nearly ready, so Marcus Blackmore, the former chairman of his family’s listed vitamins company Blackmores, is selling his longheld Pittwater waterfront he shares with wife Caroline.

Their four-bedroom Newport home is almost visible from his next home, just across Pittwater.

Blackmore bought the prime 605sq m Prince Alfred Parade holding in 1995 when the keen yachtie moved to the water from Manly. The couple had architect Rowan Stewart transform the four-level home that had been built in the 1980s. Down by the water there’s a boatshed, while his luxury cruiser Ammonite sits at the end of the private deep water jetty on its sandy beach.

The veteran LJ Hooker Mona Vale agent Lachlan Elder, who describes the home as an architectural triumph, has a $9m guide, just a bit further down the same road from where model Jennifer Hawkins and Jake Wall sold their $20m abode last month.

Blackmore steered clear of the vitamin company’s $117m capital raising in May, while he was finishing off his new home. The Bayview building block cost $9.25m in 2016.

He also has a new boat being built in South Africa, just 96 feet long.

Not on the rocks

Hamburger devotee turned malt aficionado, Geoff Bainbridge has hired a chief financial officer at his renamed ASX-listed Tasmanian whisky distilling firm.

Lark Distilling Company has recruited Alex Aleksic, the former CFO at lifestyle footwear giant Accent and Shaver Shop before that.

Their vision is for Lark to be ”the Penfolds of Australian whisky”.

Once known as Australian Whisky Holdings, it was acquired in 2018.

The company has been without a CFO since Brendan Waights resigned last year in the midst of a boardroom upheaval involving Quality Life rich-lister Bruce Neill. Its chairman Terry Cuthbertson, ex-Coca Cola exec Peter Herd and Rene Rivkin’s former sidekick Gary Mares, all resigned.

That left just Bill Lark, the godfather of Australian whisky, and the only southern hemisphere distiller inducted into the World Whisky Hall of Fame, at the boardroom table along with thoroughbred enthusiast Stuart Grant.

Now Neill has Bainbridge, and the former Treasury Wines Estates boss David Dearie as its non-executive chairman, along with Warren Ra ndall, the man behind Seppeltsfield wine business in the Barossa, on the board.

The Apple Isle takes its whisky seriously. There’s even a Tasmanian Whisky Trail.

Colgan on board

The former Business Insider Australia publisher Paul Colgan has joined the C|T Group, the global research and campaigns consultancy firm. He’ll be based in Sydney as one of the political communications group directors to expand C|T’s (previously Crosby Textor) offering in media and technology.

Colgan moved to Business Insider when it launched in 2013, serving as its founding editor-in-chief until last year after the merger of Nine and Fairfax Media, which saw Business Insider’s parent company, Allure Media, merge with Pedestrian.

Colgan joins David Bell, the former CEO of the Australian Bankers’ Association, who is the company’s managing director for Australasia.

Crosby Textor was founded by Lynton Crosby and Mark Textor in 2002.

Turnbull on Gillard

Malcolm Turnbull, the venture capitalist and author currently promoting his autobiography, has raised an interesting topic.

It was while writing a piece for the Nine Entertainment on how women are very often treated disrespectfully in politics.

“What Julia Gillard endured was off the charts,” Turnbull noted.

“The idea that a radio broadcaster could say she should be put in a chaff bag and thrown into the sea was extraordinary,” he advised, while not referencing Alan Jones. He syas there’s an obsession with the appearance of women in politics.

“How often do people talk about Scott Morrison losing his hair?”

Margin Call found just the one recent hair reference in the media, from the Daily Mail reporting what someone advised on twitter.

“You never read this stuff about men. Are the males in parliament just one Adonis after another?” Turnbull asked.

Meanwhile, Gillard last week launched her new book, Women and Leadership, which she co-authored with the acclaimed development economist Dr Ngozi Okonji-Iweala.

The pair interviewed some of the world’s most prominent female leaders, including Jacinda Ardern and Hillary Clinton.

Kogan windfall

By Margin Call’s back of an envelope calculations, the online shopping company Kogan options package that will be handed over to Ruslan Kogan and his CFO, David Shafer pushed through the $100m level on Tuesday.

The shares hit a $16.85 intraday high. The options will only cost about $30m to exercise thanks to the Kogan board, who chose in May to include the March rout to set the exercise price, a three-month weighted average ending April 30.

In May the deal was valued at $53m, delivering 3.6 million options to Kogan and 2.4 million options to Shafer. At the time Kogan.com chairman Greg Ridder advised Ruslan and David were outstanding business leaders. Shareholders are yet to approve the deal.