Openpay Group (ASX:OPY) lists on ASX


by Katrina Bullock

Openpay Group Limited (ASX:OPY) CEO & MD, Michael Eidel talks about the company's business model, the size of the opportunity and how it differentiates itself from other buy now pay later (BNPL) providers.

Katrina Bullock:
Hello, this is Katrina Bullock for the Finance News Network and joining me today from Openpay Group (ASX:OPY) is Managing Director and CEO Michael Eidel. Michael, welcome to the network, and congratulations on the listing.

Michael Eidel: Thank you Katrina.

Katrina Bullock: Now, first up, for investors who might be a little bit new to the company, could we start with an introduction?

Michael Eidel: Openpay is a Melbourne-born, established player in the growing, strongly growing market for buy-now-pay-later payment services. Different to our competitors with our buy-now-pay-smarter approach, we differentiate in three main domains. The one is our product. Our payment plans range from two to 24 months, and from 50 to $20,000, all in one customer journey with no interest ever. The second differentiator is our industry approach. Besides retail, we strongly focus on industries like home improvement, automotive and healthcare. We have, we're often the sole provider or one of only two, and last but not least, our focus on the customer. We target finance-savvy, responsible grown-ups who use our product as a budgeting tool to smooth out cash flows across a wide range of lifestyle-related purchases. We have seen very strong growth in Australia, and we have recently launched successfully in the UK, as our first step of international expansion. We believe with our buy-now-pay- smarter approach, we offer investors an attractive investment opportunity, and at IPO we start with a market capitalization of $150 million, at a share price of $1.60.

Katrina Bullock: Speaking of growth, we've seen rapid growth in the buy-now-pay-later segment over the last couple of years. What's the outlook and what's the competition like?

Michael Eidel: It's still a very young and emerging industry if you like. From a purchase value perspective in retail in this $300 billion market in Australia, so far only around 2% in-store, and around 20% online have gone through buy-now-pay-later. So there's still a massive growth opportunity in retail, and if you look at the industries where we focus on home improvement, automotive and healthcare, it's even less crowded yet. Also, in the UK, an even bigger market and very, very dynamic. I think there is a global opportunity for us to grow. When it comes to competition, obviously we see various buy-now-pay-later providers with their differentiated approach and business models. We see incumbents trying to catch up, like banks and credit card providers, and we also see some lending platforms reaching into payments.

Katrina Bullock: Now turning to the platform, what are the benefits for merchants?

Michael Eidel: I think the whole point of buy-now-pay-later, as we see it, is to create this dynamic of repeat usage. To start with, we need to get it right for the merchant and their respective benefit, which you can deliver. We offer them really, the range of flexible plans which they need for their products, services and ultimately their customers. Secondly, we tend to reduce return rates and associated supply-chain costs for them, rather than to increase them. Last but not least, they really appreciate the simple way of integration, and the customer insights which we can deliver.

Katrina Bullock: What about the benefits for consumers?

Michael Eidel: As you say, active merchants leading to active consumers. Consumers, particularly like our availability across areas of lifestyle where it really matters for them, and the choice which they have with open pay across things like their home, their car, their mobility, but also the health of themselves, their family and their furry friends, as we are really simple and easy to use and available across in-store, online and by our app.

Katrina Bullock: Now, turning to strategy and financials, how much did you raise and where will the money go?

Michael Eidel: We raised $50 million and the money will go predominantly into growth in three areas. The first one is to scale in our home market in Australia and New Zealand. The second one is to now continue to launch in the UK successfully, and then enter the next markets like the EU and beyond. Last but not least, we will continue to build on our technical platform and capabilities.

Katrina Bullock: Where do you see Openpay group in say, the next 12 months and the longer term?

Michael Eidel: In the next 12 months, I want us to become a globally-recognized player in the buy-now-pay-later space, with our responsible and differentiated approach. I want us, secondly, to grow at scale in our home market, and in our international markets, and creating more active merchants, active consumers, and active plans. Last but not least, I want us to develop successfully further opportunities, like new products, new markets, and launch successfully our B2B opportunity, which is a work in progress.

Katrina Bullock: Now before we let you go, is there anything you would like to add?

Michael Eidel: It’s really time to thank first of all and foremost for our merchant and consumer customers for their loyalty and their trust; secondly, our early investors who believe in our success. It is also now time to welcome new investors and we hope we can provide them with great shareholder value and investment returns overtime.

Katrina Bullock: Michael Eidel, thank you for your time and congratulations again on the listing.

Michael Eidel: Thank you very much, Katrina.