OPY Shares Up on US$270 Million Goldman Sachs Facility (ASX:OPY)

The Openpay Group Ltd [ASX:OPY] secured a landmark US$271.4 million receivables warehouse facility from Goldman Sachs and Atalaya Capital.

OPY will leverage the warehouse facility to expand into the US market.

The news prompted a strong market reaction. The OPY share price is currently up 10%, exchanging hands for $1.405 a share.

However, despite a string of positive announcements this month, the BNPL stock is still well down for the year. Over the last 12 months, for example, Openpay Group Ltd [ASX:OPY] share price are down 54%.

ASX OPY - Openpay Share Price ChartSource: Tradingview.com

But can Openpay’s recent moves see the company turn it around?

Openpay’s US$271.4 million warehouse facility

BNPL provider Openpay secured a revolving warehouse facility to establish local funding as OPY seeks to launch and expand in the US.

The deal struck with Goldman Sachs and Atalaya Capital Management marks Openpay’s first US receivables funding facility, which will triple its existing credit facilities.

OPY said the financing comes at attractive financial terms, which in turn helps Openpay to offer financing to US consumers at affordable rates.

Here are the key terms of the secured facility:

  • Committed facility of US$135.7 million
  • An additional US$135.7 million of uncommitted funding at the discretion of the lenders
  • 2 ½ year facility term, subject to customary termination rights

In connection with the facility, Openpay will issue 1,022,271 warrants to Goldman, with each warrant exercisable into one fully paid ordinary share in the company at a subscription price of $1.3 per warrant.

This number represents approximately 0.73% of the current issued share capital of Openpay on a fully diluted basis.

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What’s the outlook for OPY shares?

Australia acted as a BNPL incubator of sorts, launching many of the world’s biggest BNPL stocks, including the trailblazing Afterpay Ltd [ASX:APT].

But Australia’s growing familiarity with BNPL also makes Australia one of the more saturated markets for the buy now, pay later industry.

Making the expansion into fresher markets all the more important. And the US market is one of the biggest of the lot — and with plenty of upside left.

According to Bloomberg Intelligence, BNPL’s penetration in the US may be around 3% of e-commerce, so there’s more room to grow.

But this very upside isn’t a secret.

OPY isn’t the only BNPL looking at the US, with Afterpay, Zip Co Ltd [ASX:Z1P], Sezzle Inc [ASX:SZL], and Affirm Holdings [NASDAQ:AFRM] boasting strong growth numbers in the US.

For Openpay, the question is: Can it carve out market share from these players, especially with traditional players like PayPal joining the party?

Openpay’s US CEO and Global Chief Strategy Officer Brian Shniderman said:

We will begin distributing BNPL in large volumes through major ecosystem partnerships like payments processors, and merchant aggregators requiring significant funding.

This is precisely what we shared as our plan with investors, and all part of our six Pillar Strategy.

This facility is now set to grow our US business at a greater scale for the global company through this exciting US launch going live this month.

Openpay’s desire to expand into the lucrative US market highlights the growth of the fintech sector.

Technological advancements and the emergence of machine learning and AI are helping launch new businesses — and ideas — in the financial services industry. BNPL is one of the most prominent and hottest examples.

But we shouldn’t conflate BNPL with all of fintech. There are other exciting businesses out there.

If you want to read about some of them, I suggest reading Money Morning’s recent report on the ASX fintech sector.

 

Regards,

Kiryll Prakapenka,

For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


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