The Laybuy Holdings Ltd (ASX: LBY) share price is down more than 14% after its capital raising and giving a presentation to investors.
Laybuy’s share price sell-off
Laybuy announced that it has completed a $35 million placement from new & existing institutional and sophisticated investors. A share purchase plan (SPP) will raise up to $5 million from regular investors. This will result in pro forma cost of NZ$54 million
The issue price for the capital raising was $0.50 per share, which was a 26.5% discount to the last closing price.
These funds are going to be used for investments in technology, marketing and people to accelerate Laybuy’s growth in the UK market. It has seen 504% year on year growth of GMV in the UK and thinks there’s a very large addressable market there.
It also revealed that it’s entering into strategic partnerships with Rakuten, AWIN and Sovrn, which will provide access to more than 5,000 merchants in the UK including ASOS, Nike, Marks & Spencer, Amazon and eBay.
Outlook for the Laybuy share price
Laybuy affirmed that it’s on track for gross merchandise volume (GMV) to exceed NZ$1 billion and for revenue to grow between 90% and 100%, in FY22.
The net transaction margin (NTM) continues to improve compared to FY21. It is being driven by lower defaults and increased repeat customers.
Laybuy Managing Director Gary Rohloff said: “The opportunity in the UK market should not be underestimated. The UK market has a retail market approximately 2.2 times larger than the Australian market in terms of overall spending. It is also a market where a higher proportion of retail spending is online, and where BNPL is still in early stages of adoption.
“Laybuy is already widely recognised as one of the UK’s leading BNPL providers, with consumers spending more than £151 million through Laybuy in the past year, up 504% on prior year.”
Summary thoughts
Laybuy is a fast-growing business and it seems like the cash will be put to good growth uses. However, it’ hard to judge how much a company should be worth in its growth phase, particularly in the BNPL space.
A lower price could be better for Laybuy, but there are other ASX growth shares that are already generating profit.
