The Prospa Group Ltd (ASX: PGL) share price is charging higher today after the online lender made an announcement to the market this afternoon.
Prospa announced a new funding partner for one of its Australian Warehouse Facilities. At the time of writing, the Prospa share price is up by 4.94% to be trading at $2.02.
What did Prospa announce?
Prospa has announced the introduction of a new Funding Partner into one of its Australian Warehouse Facilities that funds small business loans and line of credit facilities. The Partner has committed to $32.5 million Class B Notes, with the right to increase its commitment up to $65 million.
The Funding Partner is reported by Prospa to be a global investor with deep technology investing expertise across the US and European markets.
Today's release follows the Junior Funding Partner announcement on 23 December 2019. It will allow the company to redeploy approximately $16 million of additional equity capital back into its growing Australian and New Zealand business.
This brings total released capital to $33.8 million since November 2019. The total third-party funding limits for Prospa's Australian operations now stands at $485 million.
What does Prospa do?
Prospa is a financial technology company that designs, builds and utilises cloud-based, data-rich and API-enabled technologies for the small business economy in Australia and New Zealand. The company's product offering has expanded from the online business loan to now include line of credit facilities and B2B (business to business) payments.
In Prospa's most recent financial results for FY19, total loan originations for FY19 were $501.7 million, up 36.6% on the prior year and up 3.1% on prospectus forecast of $486.5 million.
Group revenue was in line with prospectus forecast with FY19 revenue of $136.4 million, up 31.2% on the prior year. This performance was driven by strong loan originations in Australia and New Zealand.
Sharp share price fall last November
Prospa share dropped sharply last November after the online lender downgraded its full-year guidance. At the time, management explained that revenue and EBITDA were expected to fall short of expectations. This was driven largely by the company's premiumisation strategy exceeding its forecast, which led to increased demand for its offerings from premium credit quality customers who pay lower interest rates over longer terms.
What now?
Prospa is set to release its full calendar year 2019 results to the market on Thursday, February 27, 2020.
