What is Afterpay?
Afterpay is the owner of the popular “buy now, pay later” app. As of 2019, Afterpay had over 4 million registered users worldwide, making it one of Australia’s true technology success stories. Afterpay is trying to emulate its outstanding success in Australia by expanding its reach into the UK, using the ‘Clearpay’ brand name, and into the USA, where it has signed major social influencers to endorse its service.
Capital raising success
The buy now, pay latter ASX share announced it has successfully raised $650 million through the fully institutional placement it outlined yesterday.
Afterpay said it was strongly supported by existing and new shareholders at the placement price of $66, which was much higher than the underwritten floor price of $61.75.
Co-founders of Afterpay Anthony Eisen and Nicholas Molnar have both successfully sold 2.05 million shares at $66 per share. They won’t sell any more shares until at least after the 2020 AGM.
Independent Afterpay director Elana Rubin said: “The market has responded strongly to our aspiration to further accelerate our investment in growing underlying sales and expanding our global footprint, with the placement being oversubscribed. We are very pleased with the support we have received from our existing shareholders and we welcome our new investors to the register. We look forward to our retail shareholders being able to participate in the share purchase plan in the coming days.”
I think it was a wise course of action for Afterpay to raise capital whilst there’s so much demand for shares. The co-founders of Afterpay are entitled to turn some of their holdings into cash – I wouldn’t want to own $1 billion of Afterpay and not much else. I’m not a buyer of Afterpay shares though, I’d rather invest in a growth share like Bubs (ASX: BUB).
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.