Fresh off their 9th consecutive quarter of record processing revenue, digital payments company Novatti Group (ASX: NOV) has their sights on new markets via international expansion where the fintech company has applied for operating licences in new jurisdictions.
It follows a hugely successful fintech model of acquiring regulatory licences and monetising them by leveraging their existing payments technology and industry-leading compliance systems. This was evident earlier in the year when Novatti secured a license to issue prepaid Visa cards in New Zealand before being selected by Afterpay as their NZ partner.
Raising $40.25 million in fresh funds via an institutional Placement and a Share Purchase Plan for shareholders, some of these funds will be applied towards expansion into Europe and Singapore.
These include an E-Money Licence which would enable Novatti to issue a range of financial products across the European Union, and a Major Payment Institution License in Singapore that would open the door to new payment product offerings. Both would significantly increase Novatti’s addressable markets in these lucrative jurisdictions courtesy of the interconnectivity between EU nations and Singapore’s central locations as a financial hub across Asia.
“As part of Novatti’s recent capital raising, we were very keen to provide existing shareholders with the opportunity to directly contribute to Novatti’s expanded growth strategy through the Share Purchase Plan,” said Novatti Managing Director, Peter Cook.
“In total, we are pleased to be raising more than $40m from this capital raising, which will enable Novatti to drive additional growth, including continuing our investment in the bank licence and accessing M&A opportunities.”
Prior to being selected as a fintech partner to Afterpay, which earlier in the week was acquired by US-based Square for $39 billion, a Principal Issuer Licence granted by Visa similarly led to a number of revenue-generating opportunities. These include the social payments app Lifepay and Novatti’s Digital Payments Accelerator which enables businesses to offer Novatti-issued prepaid Visa cards on their own branding as bespoke payment solutions.
These licenses, and others, have been a key contributor to the revenue growth Novatti has achieved. For the 12 months ended 30 June 2021, the Company reported $18.4 million in total revenue which represented a 50% increase on the previous year.
While Europe and Singapore will create new addressable markets for Novatti, the fintech company continues to expand their home base in Australia, with aims of a banking license later this year to enable the launch of their Australian banking business.
A recent report published by MST Access had a $0.80 valuation on NOV shares.
*Owners of this website are shareholders in a company mentioned in this article and have been engaged by them to assist in investor communications
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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