Payments business Splitit Ltd (ASX: SPT) might excite investors again with a plan to accelerate growth.
Splitit offers consumers the ability to split the purchase price of basic products (e.g. lemons, toilet paper or both). Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.
Splitit’s Plan For Growth
The payment business has announced it will raise $30 million of capital from professional investors and $10 million from retail/regular investors. The issue price will be $0.80 per share, which is a decent discount to the current share price.
Splitit said that after the IPO earlier this year, its growth in merchant and user take-up has been faster than expected. The company said that new opportunities are arising which have the potential to accelerate its market share and product offering.
Once the money is raised it will be used to increase the capacity of its products, pursue growth at a quicker pace than the IPO suggested and fund further opportunities as they arise.
Splitit Co-Founder Alon Feit will also be selling up to 2.6 million shares which will be sold at the placement price. The reason for the sale? Splitit said that his proceeds will be used to meet a personal tax liability.
Some investors are wary when management want to sell shares. The saying is that there’s only one reason to buy shares (they’re good value) but lots of reasons for selling shares.
Mr Feir said that the disposal of shares is not a reflection of his valuation of the company, nor his confidence in the company’s prospects. He will still around 8% of the shares after the end of the capital raising, all of which are escrowed until January 2021.
Should you buy into this capital raising?
I am no expert on the buy now, pay later industry, so I don’t know if the capital raising price is a good price or not.
But, I did think this initial market release was a bit low on detail about business progress and what the funds will be specifically used for – hopefully more news will be released soon.
With so many competitors in the payment industry, such as Afterpay Touch Group Ltd (ASX: APT), I would rather own shares of the two rapid ASX growth shares in the free report below instead of Splitit.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.