The Sezzle Inc (ASX: SZL) share price is rising after the buy now, pay later business made an announcement about a new investor.
Sezzle is in the BNPL space, with it predominately generating its underlying merchant sales from the US.
Sezzle’s new investor
The BNPL business announced that it has entered into an agreement with DFS Services, a subsidiary of Discover Financial Services where Discovers will invest US$30 million into Sezzle at a share price of AU$8.83.
At the time of writing, that means Sezzle is issuing shares at a premium of around 9% to the current share price.
If you haven’t heard of Discover before, it’s listed on the New York Stock Exchange and is a digital banking and payment services company. It is one of the largest card issuers in the US. The Discover Network has millions of merchant and cash access locations. There’s PULSE for ATM/debt networks, and Diners Club International which is a global payments network.
In addition to this investment, and subject to finalising a commercial agreement, the parties are proposing entering into an expanded partnership, including plans for a buy now, pay later network solution on the Discover Global Network, as well as a referral program introducing Discover credit and debt products to Sezzle’s consumer base.
Management comments
Sezzle Executive Chair and CEO Charlie Youakin said:
“We are excited about our relationship with Discover, as we believe our mission, vision and values align. Discover’s capabilities via their network and financial products will enhance our own offerings and provide more paths to financially empower our consumers.”
Summary thoughts on Sezzle and the share price
This is a good vote of confidence for Sezzle. To get a large financial institution willing to put up a substantial amount of money in at a price that’s much higher than the current price is a pleasing sign.
Sezzle is growing its underlying merchant sales at a very fast pace. I just don’t know how profitable it can be in the future, which is why I’m not sure about owning shares, as impressive as its business development is.
There are other ASX growth shares that might be more profitable in the future.
