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Cashrewards (ASX:CRW) share price lifts on successful IPO debut

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Fintech company Cashrewards Limited (ASX:CRW) has started trading on the ASX today following the completion of its successful $65 million initial public offering (IPO).

Minutes after trading began, the Cashrewards share price rocketed up as high as 15.6% to $2.00. It has since retreated to the current price of $1.865, at the time of writing, after initially listing at $1.73.

Proceeds from the IPO

The Cashrewards IPO was strongly supported by both institutions and retail investors. Applications for shares in the financial technology platform significantly exceeded the final raising, resulting in substantial scale back. 

The company says the net proceeds received from the IPO will total $45 million, after payment to selling shareholders and costs associated with the IPO preparation. Cashrewards says these funds will be invested primarily in marketing, product development, and key talent recruitments.

The company added the funds would also ensure that Cashrewards was debt-free at listing.

Cashrewards chief executive Bernard Wilson welcomed today’s results, saying:

Today commences an exciting new phase for Cashrewards, delivering the funds needed to accelerate progress towards our considerable ambitions. We’re delighted to have secured the support of such a quality group of investors to partner with us on the journey.

We believe that operating at the intersection of technology, e-commerce, rewards and financial services creates the opportunity for significant growth which we will pursue with prudent and thoughtful investment of the proceeds of the IPO.

Bank a major shareholder

Cashrewards had to delay its book buildup deadline earlier this month, after the Australia and New Zealand Banking GrpLtd (ASX: ANZ) came in late and said it wanted a stake in the IPO. ANZ Bank has invested $25.9 million for a 19% stake in Cashrewards.

The bank interest forced Cashrewards to upsize its bookbuild, raising it to $65 million which was split between a $45 million primary issue of new shares, and a $20 million secondary selldown. A secondary selldown refers to payment made to selling shareholders to avoid dilution in shareholdings.

What is Cashrewards

Cashrewards is a financial technology company that offers cash back to its customers upon making transactions. It makes money by charging retailers a fee of about 5.5% to use its services. It then splits the fee with the consumer in what it calls a “dual-sided value proposition that attracts shoppers and merchants”.

Cashrewards currently offers around 800,000 consumers cash back on in-store or online retail purchases at more than 1500 merchants across Australia.

Mr Wilson has in the past tried to distance the company from the buy now, pay later (BNPL) sector, saying that he doesn’t see the company as a challenger to established BNPL players. He explained that Cashrewards gave customers straight cash discounts at checkouts, whereas traditional BNPL offerings only provided the option to manage a customer’s cashflow after a transaction was made.

Cashrewards is backed by celebrity investors including former Australian cricket captain Steve Smith, who was an early investor in the venture.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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