Afterpay tech fund eyes China venture

Technology firm AP Ventures raises $50m from investors to bankroll its first move into the Chinese BNPL sector.

Technology firm AP Ventures raises $50m from investors to bankroll its first move into the Chinese BNPL sector.

Technology firm AP Ventures, which is backed by “buy now, pay later” juggernaut Afterpay, has raised $50m from investors, including billionaire Alex Waislitz, to bankroll its first move into the Chinese BNPL sector.

Following an introduction from Afterpay founders Anthony Eisen and Nick Molnar, AP Ventures invested $US10m ($13.6m) for a 20 per cent stake in the Shanghai-based start-up firm Happay, which launched its first payment product in July and is now live in three Chinese shopping malls.

Happay is a BNPL provider that allows consumers to pay for their purchases in four instalments — one upfront payment followed by three monthly payments — with no upfront fees or interest.

Happay is initially focused on partnering with leading shopping mall groups in China, where payments made by consumers in shopping malls are controlled by the malls themselves.

“We think it is a huge opportunity,” AP Ventures chairman Mike Jefferies said. “There are not a lot of Afterpay look-alikes in China. The competition comes from the likes of Tencent and Alipay, so we do think it is an attractive market.’’

AP Ventures participated in the seed-funding round for Happay alongside its founders.

The investment is unrelated to Tencent’s direct shareholding in Afterpay, which it took in May this year before Afterpay shares surged over the $90 mark at the end of last month. The shares have since fallen back slightly after last week’s market volatility and closed $3 higher at $78 on Wednesday.

AP Ventures chief executive Hein Vogel said it was a slightly unusual deal for his firm, which was formed last year to provide high-growth companies with ­access to capital and, where ­appropriate, to Afterpay’s experience and links with merchants and customers. “We typically like to do later-stage, high-growth. On this occasional we have gone earlier than we usually do, but it is within our mandate. Coming in at the ground up with this company we believe gives us a great opportunity,’’ Mr Vogel said.

AP Ventures’ $50m private capital raising, which was up-scaled from an initial $40m ­target, was supported by it shareholders, which included Alex Waislitz’s listed Thorney Technologies and Duncan Saville’s ICM Group.

Afterpay took up $15m of the issue, leaving it with a 40 per cent stake in AP Ventures, slightly down from the 44 per cent before the share issue, which was conducted by Bell Potter.

“We do have a portfolio of things we are looking at. We are actively processing opportunities. We expect before the end of the year we will make one more ­investment,’’ Mr Hein said of the remaining raised proceeds.

“We have looked at in excess of 70 transactions opportunities this year and we have a pretty strong pipeline.”

The firm’s areas of interest include retail innovation, consumer and finance and data.

Mr Waislitz said last week he expected AP Ventures to look to float on the ASX next year.

Mr Jefferies said: “We would love to bring the company to market in the next 12 months. We can’t put a time frame on that.

“Ideally, if we had four to five investments that would be a good time to do it.”

Late last year, AP Ventures ­appointed Mr Vogel, previously managing director of corporate advisory at Investec Australia, as its CEO to pursue investment ­opportunities supporting Mr Eisen and Mr Molnar’s vision to back innovation.

In February, AP Ventures agreed to pay $15m to purchase an online travel business called LayAway Travel.

LayAway allows a customer to pre-pay for holidays, including flights, cruises and accommodation, over an extended period of time through a payment plan. There are no fees payable by the user but, as with Afterpay, the earnings for LayAway come from the provider.