Struggling buy now pay later provider Openpay has been handed an A$18 million lifeline from cornerstone investors after the completion of a share placement on Monday.
The company said the placement was expected to fund the “accelerated pathway to profitability” of the Australian lending and BNPL operation.
While company believes the local business will become profitable in June next year, it did not say when its US BNPL arm would begin trading in the black.
“Openpay ANZ is accelerating its pathway to profitability through sustainable growth, market-leading margins and business simplification,” said Openpay’s Australian chief executive, Dion Appel.
“Australia is currently the engine room of the company and we remain focused on delivering this plan.
“We appreciate the strong and continued support shown by existing shareholders, and new investors for the placement and are pleased to welcome eligible shareholders to participate in the share purchase plan on the same terms as the placement to further accelerate our strategy.”
Shares issued through the placement were priced at 24 cents – a 22 per cent discount to the seven day weighted trading price up to last Thursday.
The market value of Openpay scrip has plummeted in the last 12 months as sentiment towards the BNPL sector has turned bearish.
The share price was trading above $1.70 in May 2021 but closed near a record low yesterday at 27 cents.
The company has been racking up big operating losses.
In February it reported an interim loss of $41.9 million for the six months to the end of December, which represented a deterioration on its $25.5 million loss in the previous corresponding period.
Earlier this year Openpay announced that it was scaling back its presence in the UK following a slide in operating performance.
Most of the shares issued under the latest placement were absorbed by the firm’s largest shareholder, Yaniv Meydan who now holds a 31.7 per cent interest in the company.
Meydan acquired $10 million worth of shares through the placement.
Openpay is hoping to raise an additional $2 million from retail investors when the share purchase plan is completed in July.