Credit Clear Pty Ltd (ASX: CCR) had its ASX debut Tuesday 27 October. The company had an IPO offer price of 35 cents with an indicative market capitalisation at the offer price of $78 million. Despite a slow start to its ASX debut, closing at 46 cents, the Credit Clear share price proceeded to run more than 125% in the next 3 days.
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Who is Credit Clear
Credit Clear is a fintech business that specialises in receivables management solutions. The ACCC definition of receivables management is when "creditors and collectors seek to secure payment from customers of businesses who are legally bound to pay or repay money they owe".
Credit Clear sees this market in Australia as highly fragmented, with approximately 586 receivables management businesses operating nationally. It believes that the current operating model within the sector is open to disruption due to the increased demand for efficiency from the use of technology-based platforms.
The company's key clients include SMEs and large corporations, local councils and other government departments and domestic businesses and subsidiaries of global organisations.
The company provides solutions to its clients through 3 lines of business:
- Credit Clear: digital billing and communication technology platform
- Credit Solutions: traditional receivables management
- Oakbridge Lawyers: provider of legal services for debt recovery
It generates revenues as a result of transactional platform income, platform licence income, traditional receivables management income and legal service income.
In terms of the company's financial performance, its pro-forma historical FY20 performance indicates revenues of $11.2 million with a gross profit of $5.6 million and a loss before income tax of $1.8 million.
What Credit Clear aims to do with IPO funds
The funds from the IPO will provide sufficient working capital to fund the business for 24 months based on existing levels of revenue, and provide additional financial flexibility with improved access to capital markets. Credit Clear has advised the funds will also be used to facilitate the company's objectives including:
- investing in technology and systems development to create a market-leading technology platform
- accelerating sector penetration
- achieving scale and reaching profitability.
Foolish takeaway
The market is clearly excited about Credit Clear's prospects. The company is in its early days and focused on 'tech-enabling' the receivables management sector. With the Credit Clear share price sitting at 1.01 per share at the time of writing (almost tripling the offer price), let's see where the business goes from here.
