Buy now, pay later company Afterpay is raising $800 million in a share sale as it looks to maintain sales growth momentum amid a surge in online shopping and expand into new markets globally.
The capital raising by the e-commerce provider will comprise of an institutional placement worth $650 million and another $150 million through a share purchase plan for retail shareholders.
Simultaneously, Afterpay’s co-founders Anthony Eisen and Nicholas Molnar will sell 2.05 million shares each, representing 10 per cent of their respective holdings in the company.
Afterpay shares last week hit a record high of $70 each, and on Monday closed at $68 each.
Its shares have soared amid a shift to online spending during the coronavirus lockdowns across major countries and as the company has expanded in to the key US market.
That growth potential was underlined after Chinese gaming and social media group Tencent Holdings in May bought a 5.0 per cent stake in Afterpay.
“By raising capital today, we believe we will be in the strongest position possible to execute on our strategic initiatives and growth aspirations,” Mr Eisen, who is chief executive, said.
“Our ongoing investment in growing our retailer and customer bases, and global expansion objectives, will ensure we continue to deliver long term benefits to our shareholders.”
The company said as part of its global expansion roadmap, it plans to launch the service in Canada in the current quarter and has the potential to launch into other new markets in late 2020 or early 2021.
It will also launch in-store services in the US in the current quarter.
As part of this plan, it is exploring a number of small mergers and acquisition opportunities to speed up roll out across potential new international markets.
Afterpay also outlined its trading performance in the June quarter, with underlying sales surging 127 per cent from a year ago to $3.8 billion.
The company said this was its highest quarterly performance ever, and reflected the accelerating shift to e-commerce spending since the impacts of COVID-19 emerged globally.
That helped lift full-year underlying sales to $11.1 billion, more than double from FY19.
Underlying sales in its main Australia New Zealand market were up 52 per cent for the year to $6.6 billion.
The company had 9.9 million active customers at the end of FY20, including 5.6 million in the US and 1.0 million in the UK.
Shares in the company have been placed in a trading halt pending the completion of the institutional sale.
The institutional placement will have a floor price of $61.75, a 9.2 per cent discount to Monday’s closing price. The final pricing will be determined in the book build.
Despite the sale of shares, its two co-founders will remain Afterpay’s largest shareholders, holding around 18.4 million shares each.