Laybuy Group Holdings Ltd [ASX:LBY] has listed on the Australian Securities Exchange today at noon.
It’s a much-anticipated debut for this Kiwi company founded by the father-and-son team of Gary and Alex Rohloff. Laybuy is a BNPL (buy now pay later) platform. It uses a fully integrated payment system that allows customers to buy goods, take them home, then pay for them weekly with six equal payments.
Laybuy’s IPO has raised A$80 million, and approximately 57 million shares were originally sold at a price of A$1.41.
At the time of writing, the Laybuy share is trading publicly at A$2.20.
Why has [ASX:LBY] listed in Australia?
Laybuy has decided to bypass the NZX and list solely on the ASX.
There are two reasons for this strategic move:
- Australia currently has the hottest BNPL market.
- The ASX allows the company to access as much liquidity as possible.
Managing director Gary Rohloff has said:
‘The capital raised through this IPO provides Laybuy with the funding needed to increase our presence in the United Kingdom, continue driving a strong marketing strategy and grow our customer base and merchant partnerships. Laybuy has worked hard to establish a strong and recognisable brand in the United Kingdom since we first launched there in 2018, and this provides the company with a very solid platform to cement our place as the leading weekly-payment BNPL provider in that market.’
Where could [ASX:LBY] go from here?
It is indeed a bullish time for the BNPL industry. It has experienced a surge of speculative investment during this COVID-19 lockdown, fuelled by soaring online sales.
However, can this feverish sentiment be sustained? Or is this just a bubble with escalating risk?
It’s important to note the warning signs here:
- Laybuy joins an increasingly crowded BNPL space. The scene is already dominated by Aussie rising stars like Afterpay [ASX:APT], Zip [ASX:Z1P], Sezzle [ASX:SZL], and Splitit [ASX:SPT].
- Last week, US giant PayPal [NASDAQ: PYPL] announced the launch of their Pay-in-4 credit platform, which only adds to the stiff competition in this marketplace.
- None of BNPL platforms so far have shown any credible profit. Debt levels are high. Margins are razor-thin.
It’s clear that the future outlook for BNPL is uncertain. According to our analysis, this bull rush may be driven by emotion rather than actual fundamentals. After a tech-driven rise post-March 23rd, the level of risk in the BNPL space might now be more heightened than it was before.
Discerning investors may need to exercise caution as they move forward.
Regards,
John Ling
Analyst, Wealth Morning
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