Laybuy plans to delist from ASX after value plummets $245m

Wednesday, 25 January 2023

Laybuy plans to delist from the Australian sharemarket, where its value has plummeted.

Kiwi buy-now-pay-later company Laybuy plans to delist from the Australian Securities Exchange (ASX) after its value plummeted A$231 million (NZ$245m) since listing just over two years ago.

The company, based in Takapuna on Auckland’s North Shore, said in a statement to the ASX on Wednesday that it would seek shareholder approval to delist at a special meeting on February 22.

Laybuy listed in September 2020 to raise money to fund growth in the United Kingdom. It sold about 57 million shares to investors at A$1.41 apiece, and its shares surged as much as 63% on the first day of trading to touch A$2.30. The shares had since sunk to A6 cents, which saw the company’s value plunge to A$15m from A$246m.

The shares dropped further following the announcement to A3.9 cents.

Managing director Gary Rohloff said given low trading volumes and an underperformance in the share price, the costs of remaining on the ASX outweighed any future potential benefits.

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Rohloff said that since the company listed, the economic environment had changed significantly and this had impacted investor attitudes towards growth companies.

He said all listed buy-now-pay-later companies had experienced sharp falls in their valuations as investors shifted their investments away from growth companies and into profitable blue chip companies.

“We have responded to this changing investor sentiment by shifting our strategy away from chasing rapid growth and towards achieving sustainable profitability,” he said.

Laybuy managing director Gary Rohloff says it’s disappointing the company’s strong performance has not been reflected in its share price.

In its latest financial year to the end of March 2022, Laybuy widened its loss to A$51.6m, from A$41.3m the previous year.

Laybuy undertook a major restructuring last year, reducing its staff by about a third and cancelling some projects to save money as it strove to become profitable. Following a strategic review, it decided against selling the business and said it would focus on slower but profitable growth in its emerging UK market.

Rohloff said the restructure had put the company in a strong position, and it was on track to achieve a pre-tax profit by the end of this financial year.

“To the disappointment of the board and shareholders, our continued strong performance has unfortunately not been reflected in our share price and this has led the board to conclude that the market might not be valuing the company fairly when compared to our peers,” he said.

“This impacts our ability to attract new investors and institutional partners.”

Delisting would also free up management time, which could be spent on other matters for the benefit of the company, Laybuy said.

The company estimated it would save about $40,000 a month, or $480,000 a year, in administrative, compliance, and other costs if it delists, noting the requirements had proven “burdensome” in recent times.

The Laybuy platform allows shoppers to buy goods and pay them off weekly over six equal payments. It makes money from merchant service fees and late payment fees.

The buy-now-pay-later sector has come under pressure as rivalry increased, making it harder for smaller players like Laybuy to find investor support. The sector is also under threat of increased regulation and is likely to feel the pinch from tougher economic times.

The shares were not widely traded, which contributed to high volatility in its share price and limited its ability to attract institutional investment and raise capital, the company said.

As at December 7 last year, 4402 shareholders owned “unmarketable” holdings of A$500 or less, representing 71% of shareholders, indicating a limited market for trading in its shares, it said.

The board believed the company would have better access to capital on more favourable terms if it delisted, although it noted this was not a certainty.

Laybuy was not able to buy back the company’s shares from investors, it said.

If shareholders approved the proposal, the last day for trading the company’s shares on the ASX would be March 22.

The company’s shares would then be able to be traded in weekly auctions on New Zealand’s Catalist Public Market, a licensed stock exchange designed for small to medium businesses.