As the buy now, pay later (BNPL) sector rages on, companies like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are having to make room for new players such as Deferit. Whilst Deferit is not currently listed on the ASX, it has been busy raising capital of late.
Yesterday, my Fool colleague Sebastian Bowen wrote about the up and coming Sweden-based BNPL company Klarna, which was recently valued at approximately US$31 billion.
Today, let’s take a closer look at Deferit and what it has been up to.
Deferit raises $15 million from investors
According to an article in yesterday’s Australian Financial Review, Deferit has secured $15 million in investor funding.
The company does not categorise itself as a BNPL service, although there are similarities between its business model and those of traditional ASX BNPL players.
Deferit’s offering involves paying the bills of its customers upfront in exchange for being repaid in four fortnightly payments. The business charges $6 per month for its service.
This varies from traditional BNPL services in that the company does not fund discretionary items. Also, according to Deferit, its service does not build credit like traditional BNPL providers since the bills are already owing.
The business claims to have 250,000 customers and estimates it has paid more than $100 million of bills.
Is Deferit positioning for an IPO?
Business News Australia reported that Deferit will use the funding to ramp up marketing activities and grow its team. It further notes that Deferit has witnessed a 150% growth in its business over the past twelve months.
So while Deferit is not listed on the ASX, it seems like the business has its eye on expansion.
With the Afterpay share price booming nearly 300% higher over the past twelve months and the Zip share price delivering growth not far behind it, it seems Deferit is ready for its piece of the growing consumer fintech sector action.
Yesterday, ASX technology shares had their best day since 2 February 2020. Afterpay and Zip each posted gains of more than 4% and 6% respectively.
While the S&P/ASX 200 Information Technology Index (ASX: AXIJ) technology rose by 4.2%, the S&P/ASX 200 Index closed yesterday with a 1.36% gain.
As long as the BNPL sector continues posting such big gains, we’re likely to witness a new crowd of offsprings, like Deferit, entering the market and possibly gearing up for an ASX premier.
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Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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