In one fell swoop, Aussie buy-now-pay-later provider Openpay (ASX: OPY) has tripled its revenue and customers in the UK via their acquisition of specialist automotive lender Payment Assist in what will be the largest BNPL acquisition in the UK to date.
The deal will accelerate Openpay’s pathway to profitability in the UK with the addition of Payment Assist’s £78.1m loan book from more than 177,000 active customers.
Consideration for the acquisition is £11.5 million (approx AUD $21.1m) with additional earn-out considerations of up to £17 million (AUD $31.1m) payable on performance over the next three years.
“In Payment Assist, we saw a unique opportunity to acquire a profitable, market-leading player in the £26.7 billion UK addressable automotive market,” said Openpay CEO, Michael Eidel.
“The proposed acquisition of this fast-growing business accelerates our automotive market entry and secures a significant foothold for Openpay in the UK. We want to be a responsible provider of alternative payment and credit solutions to our customers – importantly, it’s a core tenet of our strategy to embrace regulation in all of its forms.
“With this proposed acquisition, Openpay joins with a business that is already embracing UK Financial Conduct Authority regulation and brings a responsible approach to its customers and merchants. I look forward to welcoming Payment Assist into the Openpay family.”
Founded in 2013, Payment Assist’s automotive financing services are offered at more than 7,000 locations such as dealerships and repair centres. The business is on track for £105.3m Total Transaction Volume where Openpay plans to increase it’s footprint by expanding the service to be offered in more of the UK’s 42,000 garages.
The transformative acquisition is tipped to accelerate Openpay’s presence in the UK where they will have more than 450k active customers once completed.
Although Payment Assist currently has 177k active customers, they have serviced a total of more than 500k which will open up cross-promotional opportunities from former customers beyond the automotive financing market.
On a pro-forma basis, the addition of Payment Assist triples Openpay’s annual UK revenue from £2.4m to £8.4m (AUD $15.4m), a combination of administrative fees and lending margins.
While the UK is a core focus for Openpay’s global expansion, the Company has already confirmed the launch of US business ezyVet which supports more than 1,200 veterinary practices across the US with its vet practice management software.
Unlike other retail-focused BNPL service providers, Openpay offers financing solutions of up to $20,000 with payment plans ranging up to 24 months.
For the Quarter ended 31 March 2021, Openpay reported total revenue of $6.6m with net cash outflows of $7.7m, taking their year-to-date outflows to $44.5m. Although the Company is still some distance away from profitability, their cash position is secured after raising $37.5m via Placement and $8.7m from a Share Purchase Plan in recent months on top of a new $25m debt facility.