As blockchain technology continues to disrupt traditional financial institutions, digital payments company Novatti Group (ASX: NOV) has secured a range of new investors keen for a slice of their AUDD stablecoin business which has minted more than $4 million since launching.
AUDD is a 1:1 fiat-backed stablecoin that enables businesses, people and governments to make financial transactions at a fraction of the cost and time currently taken by fiat payments.
Launching in 2022, AUDD has become available on Ethereum, XRP Ledger and Stellar blockchains with more than $4 million minted, $5 million transacted and $1.5 million in active circulation. The stablecoin has also recently been integrated with other platforms and services including web3 trading platform Zerocap and MyBrix.
Drawing interest from fintech investors, AUDC Pty Ltd (“AUDD”) which issues AUDD has completed a pre-seed funding round which has raised $300k at a pre-money price of $2.4m from investors and management. The funding round has reduced Novatti’s stake in AUDD down to 91%.
The external investment is part of a strategic review being led by CEO Mark Healy who was appointed in June 2023, seeking to streamline the Novatti portfolio from 12 individually run businesses to four integrated divisions.
“Since taking over as CEO, I have made it a key goal of FY24 to simplify and focus the Novatti business to pivot away from a diversified portfolio of independent businesses into a streamlined Payment Solutions company,” said Healy.
“A key pillar of achieving this goal has been undertaking a review of all business areas against strategic and financial goals, to identify opportunities for portfolio optimisation and divestment.”
AUDD’s strategic collaborations with various financial institutions position it as a frontrunner in providing contemporary use cases for clients, creating a seamless experience for digital payments. The fundraising has seen experienced fintech investors take equity positions in AUDD, as well as operational management who will drive the growth of AUDD further with more blockchains flagged. It was also a method for Novatti to drive its strategic focus without diluting NOV shareholders.
AUDD plays an integral role within payments companies such as within the Novatti digital payments ecosystem where it can be utilised for cross-border payments more efficiently than via traditional financial institutions, such as major banks.
Highlighting the rising value of stablecoins in the global financial industry, total market capitalisation of stablecoins exceeds USD $110 billion. This includes various stablecoins pegged to different fiat currencies, commodities, or algorithms.
Compared to traditional international transfers, stablecoin transactions can settle in minutes, offering a faster alternative and why corporations have shown growing interest in stablecoins. Some central banks and governments are also exploring central bank digital currencies (CBDCs), including Australia where Novatti was selected for the pilot program.
The AUDD business of the Melbourne-based fintech generates revenue from onboarding, offboarding and net interest.
Experienced payments leader, Effie Dimitropoulos is the CEO of AUDD. “The additional working capital has already enabled AUDD to bring on a new strategic partner, increase our liquidity and further drive business development” said Dimitropoulos.
For the quarter ended 30 September 2023, Novatti reported $10.8 million in sales revenue which represented a 6% increase on the June 23 quarter. Since then, Novatti has divested its stake in Reckon (ASX: RKN) as part of its strategy to streamline the business portfolio in a move that fully paid off its corporate bond, saving $4 million over the next four years while delivering a net gain of $1.5 million from the investment.
“The process is ongoing and we expect it to identify further opportunities for portfolio optimisation and divestment,” added Healy.
As part of that process, IBoA is in the process of finalising a Series A round, with several investors undertaking detailed due diligence. This funding round has not impacted the ongoing operations of IBoA which continues to work on technology deployment, deposit and loan product builds and development of its policies, procedures and compliance in preparation for a transition from its restricted banking licence to a full banking licence.
Emily Maxwell is a business writer at The Sentiment with interest in the tech, fintech and retail industries.
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