Money in muck: Bin night leads to $39bn Afterpay bonanza for Nick Molnar and Anthony Eisen

The ‘buy now, pay later’ success story of Afterpay has suddenly become the biggest deal in Australian corporate history — seven years after the company was formed

Anthony Eisen, left, and Nick Molnar will emerge with almost $5.5bn of combined shares in the New York Stock ­Exchange-listed Square. Picture: David Geraghty

The simple act of putting the bins out one night was the first step in a seven-year rollercoaster ride leading to the biggest deal in Aus­tralian corporate history, Afterpay’s $39bn merger with US giant Square.

The deal cements a precocious 31-year-old Nick Molnar and business partner Anthony Eisen, 49, among the ranks of the country’s wealthiest on The List – Australia’s Richest 250 and comes slightly more than four years after the duo floated their groundbreaking “buy now, pay later” business on the ASX.

Molnar said he understood the significance of the deal, announced on Monday, for the burgeoning homegrown tech sector that has created a group of star young entrepreneurs ranging from Canva’s Melanie Perkins to Atlassian duo Scott Farquhar and Mike Cannon-Brookes.

“I’m really proud of what this represents for Australian technology,” Molnar said on Monday. “It is a really exciting future for us.”

Molnar and Eisen will emerge with almost $5.5bn of combined shares in the New York Stock ­Exchange-listed Square, the fin­ancial services giant started by Twitter founder Jack Dorsey, after engaging in secret talks about the deal for the past six weeks.

They will also stay on to work in the combined group.

This is all a far cry from when Molnar and Eisen first crossed paths a decade ago.

It all started when Eisen, a one-time investment manager who was grappling with the effects of the global financial crisis that was keeping him up at night, took the rubbish bins out on his street in Bellevue Hill in Sydney’s eastern suburbs late one evening. He ­noticed there was always a light on at the house across the road and someone there was working hard into the early hours.

“This went on for three months. I said to my wife, ‘Well this is a pretty good neighbourhood but do you think it’s drugs?’ She said ‘No, there’s likely a good explanation’,” Eisen told The Australian earlier this year.

“One night I went out again to put the rubbish out. I said to Ron Molnar, my next-door neighbour, ‘I don’t mean to be rude but what the hell is going on up there every single night?’ And he said, ‘Oh that’s my son Nick’.”

Nick Molnar was selling jewellery over the internet on eBay — his parents ran a jewellery business at Wynyard station in the Sydney CBD — and taking deliveries to the local post office each morning after a night of packing.

Such was his success that he was selling more than anyone else in the country and had become eBay’s No.1 jewellery seller.

Despite their age gap, Eisen and Molnar struck up a friendship as the elder of the duo took an interest in his jewellery business that went on to become iceonline — still run today by Molnar’s brother Simon and their mother, Michelle.

Molnar would later share his idea to help what he now calls “fairness and financial freedom” for younger consumers in particular, the millennial shoppers who have become such a key part of the Afterpay success story.

The idea was that younger millennials were shying away from credit cards because they feared being laden with debt, and that paying for something in instalments in a sort of debit card style transaction would prove far more palatable.

“I had just turned 18 and I was told ‘Don’t spend money you don’t have’,” Molnar told The Wall Street Journal last year.

Afterpay would be born in 2014, refining Molnar’s idea into a business that derives most of its revenue from retailers who pay a fee and percentage of a sale to ­Afterpay.

Customers pay a fee only if they miss a payment over four interest-free Afterpay instalments.

Molnar and Eisen took Afterpay public in June 2017 in an ASX float that valued the entire business at $165m. Even at that level, most big Australian institutional investors shied away from putting money in a fledging business that Eisen admitted was close to failing in those early days.

“There have been quite a few instances where I’d come home and just say, ‘Look, I think this is it’,” he said. “We were too early to go public, in hindsight.”

One early believer was billionaire investor Alex Waislitz, whose Thorney Investments emerged with an Afterpay stake after the float and still has about $50m in shares today.

“It is fantastic to see how Afterpay’s Australian-grown technology has been taken up on the world stage, and this deal is a cred­it to both the vision and the executional abilities of Anthony Eisen and Nick Molnar and their teams,” Waislitz told The Australian on Monday. “I think it is likely to lead to more consolidation in the (buy now, pay later) sector but it will also focus more global attention on the wider Australian tech sector and the valuations of other Australian — but potentially global — companies in the tech space.”

Afterpay has had its ups and downs since floating.

It is only some 18 months since Afterpay shares were hit hard in the early days of the Covid pandemic sharemarket sell-down in March last year. Afterpay’s share price dropped by about 9 per cent in three days of trading and Eisen wrote to shareholders to reassure them.

There are no such fears now. The company’s shares skyrocketed on Monday to finish up almost 19 per cent at $114.80, close to the value of the Square deal of an implied $126.21 a share.

The Afterpay board has recommended its shareholders accept the offer, which will see investors receive 0.375 shares of Square stock for each Afterpay share they own. It expects Afterpay shareholders will own about 18.5 per cent of the combined company when the deal completes in the first quarter of 2022.

Molnar’s current stake of 6.87 per cent means the deal is worth $2.68bn to him, while Eisen’s 6.72 per cent stake equates to a $2.62bn share windfall.

The duo will stay on in the combined company, with Square planning to integrate Afterpay into its existing Seller and Cash App business units, which would “enable even the smallest of merchants to offer BNPL at checkout” and give Afterpay consumers the ability to manage their instalment payments in Square’s Cash App.

It also brings Eisen, who last year became Australia’s youngest billionaire, into a business partnership with one of the world’s tech leaders in Dorsey.

“Our mission being fairness and financial freedom for all and Square’s being around economic empowerment, there’s really clear alignment there,” Molnar said on Monday. “And the strategy … is a really core part of the reason why we’re here today and why this deal makes sense.

“In the US we’re still at the early stages of our growth curve … and we see a huge global opportunity for ‘buy now, pay later’.”