Australia’s buy-now-pay-later company Afterpay weighs US listing

Australian buy-now-pay-later company Afterpay said on Tuesday it was investigating a US listing after North America became its largest market, offering global investors an easy way to own a stock plagued by the pandemic has.

Afterpay advised Goldman Sachs to provide advice on the listing, two sources with direct knowledge of the matter told Reuters. Goldman declined to comment.

The Melbourne-based business was last valued at almost A $ 37 billion ($ 28.7 billion), despite never making a profit, thanks to the coronavirus-driven increase in online shopping and rapid expansion in overseas markets, including the United States.

Afterpay, which announced its third-quarter results on Tuesday, said sales in North America nearly tripled, surpassing Australia and doubling the total value of the transactions it processed to 5.2 billion A compared to a year earlier.

A US listing is likely to further open the Australian fintech star to an investor base that gives greater weight to growth, and possibly also provides easier access to capital to fund expansion plans.

Nick Molnar, co-CEO of Afterpay, which founded the company in 2015, told Reuters it is a ‘proud organization with its Australian headquarters’, but a US listing could offer ‘attractive opportunities’.

‘The prioritization of the US listing exploration is merely an extent to which it provides the company with more operational leverage from the perspective of being present in the market that is now the largest contributing segment … and we offer the right investor base, he said.

Afterpay said in a statement that it plans to remain headquartered in Australia, but does not say whether a US debut in the US market will be based on a dual listing structure or that it will abandon its Australian location. It also did not provide a time frame.

In North America, Afterpay is considered against Affirm, Zip Co’s Quadpay, new entrant PayPal, and Sweden’s Klarna, valued at $ 31 billion, is looking at a direct listing in the United States.

Affirm’s $ 17 billion valuation was based on 4.5 million buyers, while Afterpay had $ 14.6 million, which means a valuation of more than $ 47 billion, said Emanuel Datt, founder of Datt Capital, which owns Afterpay shares in 2018 bought about A $ 7.00, said.

“U.S. investors are generally willing to pay a higher multiple for a growth industry like Afterpay. This is related to the deeper pools of capital available … compared to Australia,” Datt said.

Shares of Afterpay traded at A $ 126.17 on Tuesday against a slight decline in the broader market. The share has risen by more than 200% since the highest pandemic in February 2020.

The growth of Afterpay has slowed in Australia, and it is likely to experience a margin strain this year, as the largest banking and PayPal country launches BNPL offers with a promise of lower fees.

The company launched in parts of mainland Europe last month and plans to relocate to Asia. The savings accounts, which are linked to Westpac Banking Corp., are expected to be taken into use later this year.