WISR Ltd (ASX: WZR) went into a trading halt this morning as the Australian Financial Review (AFR) reported the neo-lender's plans to raise fresh equity. According to the AFR report, Wisr is seeking up to $35 million dollars to strengthen its balance sheet and fund ongoing growth and working capital.
Equity raising
The raising is reported to be structured as a $30 million placement and $5 million share purchase plan. According to the AFR, the placement was priced at 18.5 cents a share, a 21.3% discount to Wisr's previous close at 24 cents.
Wisr shares stormed higher throughout 2019, quadrupling in value over the course of the year. The fintech lender last raised equity in March 2019, successfully completing a $15 million dollar placement. Shares in that placement were issued at 6.8 cents, an 8% premium to the last traded price, with the placement heavily oversubscribed.
Wisr's business
Wisr is an online lender originating personal loans to consumers on 3, 5, and 7 year terms. Loans are then onsold to institutional, retail, or wholesale investors. Wisr brands itself as having a vision of improving customers' financial wellness. Wisr@Work, a workplace financial wellness program, and Wisr App, a debt reduction tool, were launched last year and allow for low cost customer acquisition. The company has relationships with B2B2C channels such as employers, health insurers, and superannuation providers which can distribute Wisr products to members.
Originations up
Just yesterday, Wisr reported growth of 36% in loan originations in 2QFY20, with $31.6 million in new loans written in the quarter. Total originations reached $163.8 million as at 31 December 2019. In 1HFY20 Wisr originated $54.9 million loans, a 90% increase over 1HFY19, and a 35% increase over H2FY19.
Funding
Last year, Wisr announced the completion of an initial $50 million debt warehouse program with the potential to increase the program size up to $200 million. Senior funding to the program, which will support the scaling of Wisr's personal loan originations, is provided by National Australia Bank Ltd (ASX: NAB). The new loan funding facility became operational in 2QFY20, providing an approximate tripling of average margin compared to previous loan unit economics.
Outlook
In 2020, Wisr is looking to scale as it leverages previous forward investing in the Wisr ecosystem. Wisr is seeking to accelerate loan origination growth while benefiting from increased loan economics. which will generate a significant uplift in earnings from Q2FY20.
Wisr has advised the ASX that it expects the trading halt to last until Thursday 16 January 2020.
