QuickFee: Another payments hopeful to for ASX boards

Fintech QuickFee will hit the ASX boards tomorrow to increase its presence in the US.

QuickFee Limited

ASX code: RF1

Shares on offer: 140.6 million

Listing price: 20c

Market capitalisation: $28.1m

Listing date: July 3

Fintech company QuickFee will hit the ASX boards tomorrow to increase its presence in the US and complete the acquisition of two operations — QuickFee AU and QuickFee US.

Upon completion of the acquisitions, the combined company will operate in the payments platform and small-business lending sectors through its finance solutions. The Australian arm has an established track record, while the US operations are pitched as a potential powerhouse of growth.

Besides the vendor sale, the public offer is expected to raise $13.5 million through the issue of 67.5 million shares at 20c each.

The company was originally founded in 2009, offering a payment gateway for Australian accounting and law firms facilitating flexible payments and finance to clients via the QuickFee system.

The company says it has financed more than $170m worth of fees for accounting and law firms and their clients.

Revenue is generated through monthly hosting fees, credit card processing and interest accrued and fees from debt financing.

The market cap post-IPO will be $28m on an undiluted basis.

Apart from operational risks, which include credit risks and company financing risks, competition and regulation are the primary hurdles. The company may be forced to compete on a pricing basis to remain competitive as new competitors or technologies emerge.

The commercial lending sector in the US is heavily regulated state by state.

The combined QuickFee business has experienced strong growth in recent years. For the nine-month period ended March 31 the company delivered $4.3m in pro-forma revenues, which already surpasses the 2018 result.

The total comprehensive loss amounts to $1.8m and the company may remain unprofitable for a while as top-line growth will remain the key focus.

ASX-listed peers have had a good run so far but the payments sector is always vulnerable to regulatory scrutiny and IPO investors need to feel comfortable with this added risk.

Simon Herrmann is an investment analyst at www.wise-owl.com