MONEYME's share price could rise on deleveraging drive

The share price of ASX-listed buy-now-pay-later (BNPL) company MONEYME (ASX: MME) could receive a boost from a sizeable capital raising to reduce its debt load and streamline the cost of its capital structure.

MME hopes the improvements to its financial standing will help the BNPL company to become one of few ASX-listed fintech companies delivering statutory profits.

MONEYME raises $37 million to deleverage

MME's shareholders have given their approval to a $37 million capital-raising to strengthen the company's financial position by paying off corporate debt.

The company first announced the fully underwritten share placement on 30 March at a price of 8 cents per share.

Shareholders gave their near-unanimous support to the $37 million placement at an extraordinary meeting held on 17 May. The placement includes a $4 million contribution from MME director Scott Emery.

MME has allocated $32 million of funds raised by the placement to payment of a corporate debt facility used to finance the acquisition of SocietyOne – a leading Australian peer-to-peer lender.

The repayment will deal with the short-term part of the corporate debt facility, resulting in improved terms for the remaining debt and annualised cost savings of around $7 million.

MME CEO Clayton Howes said this improved financial standing would bolster the company's profitability, paving the way for more sustainable growth in future.

'The approved $37 million placement allows us to proceed with the planned paydown of our corporate debt facility, strengthening our balance sheet and supporting our profitability through significant costs savings,' Howes said.

'It concludes our strategic capital initiative, relieves the uncertainty that has been weighing on our share price, and positions our business for sustainable and profitable growth in FY24 and beyond.'

MME has also offered existing retail shareholders the opportunity to participate in a share purchase plan.

'We are pleased to offer retail shareholders the opportunity to participate at the same price via our planned $5 million Share Purchase Plan (SPP) – a price that we firmly believe represents a significant discount to the value created in our business and the opportunities ahead of us,' Howe said.

MME anticipates $16 million in statutory NPAT for FY23

MME projects FY23 gross revenue of over $220 million alongside more than $16 million in statutory net profits after tax (NPAT). Should MME make good on these projections, it will be one of few ASX-listed fintech stocks to achieve statutory profits.

The company's third-quarter FY23 results came in strong, leaving it well-positioned to fulfil these forecasts.

MME achieved $61 million in gross revenue for the quarter, for an increase of 75% compared to the same period last year. Statutory NPAT for the period was over $7 million, further building on profits of $9 million for H123.

MME's latest quarterly report also highlighted an 18% year-on-year (YoY) rise in its net interest margin to 13%, alongside improvements to the credit profile of its loan book with an average book Equifax score of 718. According to MME, the rise in its Equifax score is the result of an ongoing focus on credit risk management and the targeting of borrowers who are higher quality credits.

Fintech innovations expected to drive growth

MME hopes the deployment of new fintech innovations can help to drive the growth of its customer base.

Following the completion of a successful trial phase, MME launched its app-based MONEYME Credit Score product in January. The product has proven to be a considerable success, attracting around 60,000 customers as of the end of the first quarter.

MME has also started to migrate SocietyOne Credit Score customers to its self-branded app, in a bid to raise customer engagement and capitalise upon cross-sell opportunities.

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