By Colin Kruger
Afterpay rival Splitit says it is not seeing a decline in consumer spending due to the pandemic as it announced plans to raise up to $100 million from investors to fund its global expansion plans.
Chief executive Brad Paterson said that while the buy now, pay later operator remains cautious about the ongoing impact of COVID-19 it has seen consumers change their spending habits rather than reduce it.
"What people were spending on travel and dining they’re moving to spend online, to invest in themselves, their fitness, their families and their homes," Mr Paterson said.
Splitit boss Brad Paterson said the funds will be invested in its global expansion focused on the US, Australia and the UK.
But he acknowledged that the full impact of the pandemic has yet to hit home. "We remain cautious and we’re looking at the impact across the entire economy in different parts of the world, ... we are talking tens of millions of people unemployed so that is going to be having an impact on the economy.”
It won't be holding back Splitit which announced on Wednesday that institutional investors have committed $90 million in the first leg of the capital raising, which will be followed by a $10 million share placement with current investors.
Significantly, it has gained Woodson Capital as a substantial shareholder, the US investor which made a significant investment in Afterpay last year.
“They've been a supporter of the buy now, pay later space for quite some time,” Mr Paterson said. “We’re very excited to be partnering with them and see them as a strategic partner, given their knowledge of the space.”
Splitit conducted the raising at an offer price of $1.30 a share. The stock, which had closed at $1.365 on Friday before the raising was announced, rose 15 per cent to a high of $1.64 on Wednesday morning before retreating in afternoon trade to $1.48.
Mr Paterson said the funds would be used to push its global expansion in the US, Australia and the UK and to accelerate growth by investing in marketing and sales to drive the acceptance, awareness and use of the product. “I do think we’re in a high growth phase of taking [market] share … I think that will go on for a couple of years,” he said.
“I remember from my time at PayPal, it took years to build our acceptance. And once you have acceptance you can start to innovate a lot more, in terms of expanding your offering.”
Splitit will issue 69.2 million shares to institutional investors at $1.30 a share and will now offer placement shares to eligible investors at the same price later this month. The share purchase plan will not be underwritten.
Unlike its buy now, pay later rivals, Splitit operates on top of customers' credit cards. It uses the available credit on a user's existing credit card to secure the full value of the transaction, with customers paying the monthly instalments.
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