LayBuy share price surges 45% during Monday’s IPO

We examine the price action from today’s initial public offering as well as look at some of LayBuy’s key operational metrics from FY20.

LayBuy share price action, BNPL grows crowded

Over the last few years, the Australian market has attracted a bevy of high profile buy now pay later (BNPL) listings, including: Afterpay, Zip, Sezzle, Splitit and Openpay.

Today a new company was added to that seemingly ever-growing list, with LayBuy Group Holdings (ASX: LBY) officially listing on the ASX, in what was a moderately hyped initial public offering.

'With this support from our new shareholders, the board, management and the entire Laybuy team are committed to growing the value of Laybuy as we continue to focus on achieving our goal of creating a ubiquitous global brand,' said the company's Co-founder and MD, Gary Rohloff, in response to today's listing.

The stock finished out its first day’s trade at $2.050 per share – up an impressive 45% from the IPO issue price.

A brief history

Following explosive growth across the BNPL sector, the company launched its own instalments product in New Zealand in 2017. After finding success in that market the company expanded into Australia in 2018 and would eventually expand internationally.

Indeed, while LayBuy fashions itself as the dominant buy now pay later company in New Zealand – its management team appears to have wider-ranging ambitions. Not content with the Trans-Tasman alone – in early 2019 LayBuy made international expansion a priority, moving into the UK BNPL market – which the company contends is less saturated than Australia and New Zealand.

Like many other BNPL providers, the company focuses on facilitating transactions within the fashion, travel, homewares, sports and entertainment segments.

According to management, a central point of differentiation between LayBuy and other buy now pay later providers is its payment schedule. While Afterpay repayments, for example, are typically split over four equal payments – it is most common that LayBuy customers repay their outstanding balances in six even instalments.

Moreover, based on a customer’s credit worthiness, LayBuy’s transaction limits sit at between NZ$120-1,500.

Details of the IPO

At an IPO offer price of $1.41 per share, the LayBuy share price was bid as much as 63% higher during today’s initial public offering – hitting an intraday high of $2.30 per share.

For reference, as a listed entity, LayBuy will have around 178 million shares outstanding.

Elsewhere, examining some of the company's key operational metrics as reported in its prospectus, for FY20 LayBuy reported:

  • Gross merchant volumes (GMV) of NZ$226 million, up from NZ$126 million in FY19
  • Revenues of NZ$13.7 million, against a gross margin of NZ$9.1 million
  • A net loss of NZ$16.1 million

At the time of listing LBY had 5,672 active merchants and 473,000 active customers.

Uses/ purposes of the funds

Overall, the company said it would use the funds raised from today’s IPO to support receivables growth across its UK operations as well as to scale up its marketing activity and staffing capacity in the UK.

'The United Kingdom provides a significant opportunity for LayBuy due [to] the size of the retail market and the infancy of this form of BNPL in that market,' the company noted.

Other uses of the IPO funds/ reasons behind the IPO include: access to capital markets as a means of supporting future growth; covering the costs associated with the IPO; and the increase in brand awareness that comes from being a publicly listed company.

How to trade LayBuy – long or short

What do you make of LayBuy’s IPO: are you bullish or bearish on the company’s prospects? Whatever your view, you can use CFDs to trade both rising and falling markets, including LayBuy and other BNPL stocks – through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) the Australian dollar using CFDs, follow these easy steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘LayBuy’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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