Buy now pay later company Openpay sinks on ASX debut

afterpay river openpay sinks in ASX debut after IPO


By Loren Webb

Afterpay rival Openpay is trading down 20% in its ASX float following a $50 million initial public offering.

The Melbourne company’s shares were trading at $1.36 at 1500 AEDT, down 15 per cent from the IPO price of $1.60, and had traded as low as 20 per cent down.

“It’s obviously not great from the early early hours, but we are here for the long haul,” Openpay chief executive and managing director Michael Eidel said.

The company was “very excited” to be making its debut on the ASX and by the support shown in the significantly oversubscribed initial public offering, which was underwritten by lead manager Shaw and Partners.

While the buy now, pay later space in Australia is crowded with competitors including Afterpay, Zip, Splitit, Humm, Brighte and Laybuy, Mr Eidel said Openpay stood out with its focus on higher value transactions.

While Afterpay purchases are limited to $1,500 and must be repaid within eight weeks, Openpay handles transactions of $50 to $20,000 in installations lasting from two to 24 months.

Openpay operates in the retail, automotive, health care and home improvement verticals, and appeals to a slightly older demographic than Afterpay, with the average age of its customer ticking in at 38.

Openpay was first tested as a payments solution for co-founder Yaniv Meydan’s plus-sized women’s clothing line Taking Shape in 2013, before being commercialised to a broader merchant group in 2016.

As of November 30th, Openpay had 1,834 active merchants, including Bunning’s, Peter Alexander, Smiggle and AP Eagers.

It has 178,390 active customers in Australia, New Zealand and the UK, a market it entered in June.

Openpay reported a $14.7 million loss in the 12 months to June 30th, on $11 million in buy now, pay later income, and did not make a prediction for FY20.

A third of the company was sold off in the IPO.

At $1.28 per share the company has a market capitalisation of $120 million.

Its biggest investor is Mr Meydan, who owns a 20.2 per cent stake and serves as a non-executive director.

Incoming Optus chief executive Kelly Bayer Rosmarin is also serving on the board, chaired by Consolidated Operations Group chairman Patrick Tuttle.

In contrast to Openpay’s disappointing start, in July this year we saw another one of Afterpay’s new competitors, Sezzle, perform well in their ASX launch.

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