The Openpay Group Ltd (ASX: OPY) share price is up around 13% after announcing a UK acquisition called Payment Assist.
Openpay acquires Payment Assist
The ASX buy now, pay later business is going to buy Payment Assist, which is a leading BNPL provider to the UK automotive sector.
On a 2020 calendar year basis, the pro forma (company calculated) UK entity would have recorded almost triple the overall UK total transaction value (TTV), going from £43.6 million to £121.7 million. UK revenue would also triple from £2.4 million to £8.4 million, with “very strong” transaction margins.
Openpay said this deal would accelerate growth and the path to profitability for the company, making the UK the most dominant geographic market for Openpay on a pro forma basis. The UK is expected to generate more than half of Openpay’s TTV and nearly half of its revenue in the 2021 calendar year.
What are the benefits of the deal?
The company said the acquisition would elevate Openpay’s global commercial profile. As at 9 June 2021, active merchants were up 122% to 8,200. Active customers grew 33% to 706,000. Active plans up 11.1% to 2.1 million. On a 2020 calendar year combined basis, it would have recorded TTV 52% higher, going from £273.5 million to £416.8 million. Revenue would have increased 47.4% from £23.2 million to £34.2 million.
Management said that the transaction is an important stepping-stone on Openpay’s path to becoming a leader in its chosen verticals including in the UK and US.
What’s the cost?
Payment Assist is going to be acquired for £11.5 million upfront, plus an earn-out component of up to £17 million, with completion expected in the first half of FY22.
Management comments
Openpay CEO Michael Eidel said: “In Payment Assist, we saw a unique opportunity to acquire a profitable, market-leading player in the £26.7 billion UK addressable automotive market.”
Summary thoughts about Openpay and the share price
I’m not surprised to see that Openpay is rising so much. This seems like an affordable way to expand in the UK. The fact it’s profitable is a good bonus.
Openpay is an interesting idea, but there are other ASX growth shares in the tech space that could be ideas.
