Afterpay eyes Canada

Founders cash in amid capital raising

AFTERPAY will raise $800 million, while its cofounders offload $250 million in shares to investors, as it looks to fund its expansion into Canada.

The buy now, pay later service provider will raise $650 million through a placement and $150 million through a share purchase plan.

Founders Anthony Eisen and Nick Molnar are also selling shares worth $250 million.

Afterpay launched a book build for the raise, with the floor price for shares being sold at $61.75, a 9.2 per cent discount to their last close of $68, and the top of the range $66, with bids received in 25c increments.

It said later it had received strong support for the equity raising, with the book covered at $62.50 a share.

Afterpay shares were in a trading halt. Working on the underwritten raise are Goldman Sachs and Citi.

The move comes as Afterpay shares on Monday closed at a record high of $68.00; they traded at just $12.44 in March.

Much of the surge in Afterpay has been since the start of May, when it emerged that Chinese tech giant Tencent bought a 5 per cent stake.

In a trading update with the raising, Afterpay said it had experienced strong performance across the business with underlying sales of $11.1 billion in the year to end-june, which is up 112 per cent on the previous year.

The payments operator said its June quarter sales performance “represented the highest quarterly performance ever, reflecting the accelerating shift to e-commerce spending since the impacts of COVID-19 emerged globally”.

Afterpay expects pre-tax earnings excluding significant items for financial year 2020 of $20 million-$25 million.

Active customers of 9.9 million for financial year 2020 are 116 per cent above 2019, reflecting “the flight to online spending and the attractiveness of our business model”, the company said.

Chief executive Mr Eisen said the results were a product of a “differentiated business model and loyal customer and retailer base”.

Mr Eisen and Mr Molnar have each agreed to sell 2.05 million shares, representing 10 per cent of their respective holdings in Afterpay.

Both Mr Eisen and Mr Molnar are each expected to remain Afterpay’s largest shareholders, with a relevant interest of about 18.4 million shares each.