Afterpay rival Sezzle planning Aussie IPO

LOSS-MAKING United States buy-now-pay-later lender Sezzle plans to list in Australia, braving heightened scrutiny of the sector after the financial crime watchdog ordered an audit of top local rival Afterpay Touch.

Minneapolis-based Sezzle wants to raise $43.6 million by selling a fifth of the company in an initial public offering next week and use the proceeds to fund growth in North America, according to its prospectus.

The listing comes after the Australian Transaction Reports and Analysis Centre (AUSTRAC) ordered an external audit of Afterpay for suspected non-compliance with anti-money-laundering laws.

Politicians have also called for tougher regulation of buynow-pay-later companies, which let shoppers buy products in instalments without having to go through the scrutiny of applying for a credit card or a loan.

“One of our biggest missions revolves around young people’s financial empowerment and responsibility,” Sezzle executive chairman and CEO Charlie Youakim said in an email in response to a question about AUSTRAC’s scrutiny of Afterpay.

He added that most companies that went public in 2018 were “pre-profit, so I think there is nothing remarkable about our choosing to do so as well”.

Most of the income of buynow-pay-later lenders comes from charging retailers a fee, with the promise that it will attract shoppers wary of the failings of existing forms of credit lending.

Sezzle only operates in the US and Canada and said further expansion was dependent upon how well they do in those two markets.