A financial technology company is listing Wednesday on the ASX with a market capitalisation of $280.3 million.
Plenti Group Limited (ASX: PLT), formerly known as RateSetter, is set to become the latest tech player to intrigue investors looking for early growth.
The company takes money from various sources – including retail investors – and lends it out to customers as personal, car or renewable energy loans.
Plenti will start trading on Wednesday with an initial price of $1.66 per share. The company originally sought to raise $50 million via the initial public offering (IPO), but revised that to $55 million due to demand.
Chief executive Daniel Foggo told The Motley Fool he always had an IPO in mind when he co-founded the business back in 2014.
"We've always seen this as a natural destiny," he said.
"We've always had consumers funding our loans… So it's quite a natural evolution to give them an opportunity to invest in the company."
That evolution was indeed fulfilled, with 20,000 retail loan 'funders' also becoming shareholders during the initial public offering.
"Often one of the first questions [retail lenders] have asked us over the years is 'When can we actually invest in the equity of the company?'"
What's Plenti's moat?
Borrowing and lending has been around for as long as humans, so The Motley Fool asked Foggo what makes Plenti different.
"The technology aspect of our business provides us with a real competitive advantage," he said.
"It's one of the key reasons why our revenue [annual growth rate] over the last 2 years is 60%."
Plenti owns and maintains all the technology end-to-end, according to Foggo, unlike some other startups that utilise licensed components or platforms.
"It provides operational leverage so at scale we have really attractive economics.
"Around a quarter of our staff are working on growth projects and technology or product roles. That's quite a different ratio to a lot of other businesses."
Plenti started off as a peer-to-peer lender, meaning loans were entirely funded by other retail customers. But as the company grew, institutions like banks and fixed income funds joined in.
"I think we're the only fintech in Australia to have a superannuation fund funding credit."
Plenti's diversified loan funding sources give it "resilience", Foggo said.
"It's certainly times like these when you can see some sources of capital dry up. In the [global] financial crisis, we saw wholesale funding markets dry up."
Foggo does have the runs on the board running private companies. In 2016 and 2017, he won fintech industry awards for his leadership at what was then known as RateSetter.
He co-founded buy now, pay later provider PartPay, which was sold to Zip Co Ltd (ASX: Z1P) last year.
Consumer borrowing during COVID-19
Foggo told The Motley Fool that demand for personal loans certainly dipped when the COVID-19 pandemic arrived.
But car and renewable energy loans have "performed exceptionally well".
"In our renewables business, we had a number of record lending months during the COVID period," he said.
"A lot of people were at home and they were investing in home improvements… and investing in solar panels."
Car loans initially dipped in April when all of Australia was in lockdown, but picked up afterwards as people sought to avoid public transport.
"We really invested 3 or 4 years making sure we're in the right position to grow in the automotive market. One of our shareholders, for example, is Carsales.Com Ltd (ASX: CAR)."
Plenti earned $41.5 million in revenue for the year ending March, which was up 43.8% from the prior year. It forecasts $48.6 million for the 12 months to September.
The company made a $16.5 million net loss for the year ending March.
