Credit Corp has gone to the market to raise up to A$150 million of new capital, which it will use to increase liquidity and reduce net debt.

The company has launched a fully underwritten institutional placement to raise $120 million and a non-underwritten share purchase plan to retail shareholders to raise an additional $30 million.

The placement issue price is $12.50 a share, which is an 11.6 per cent discount to the closing price on 28 April and a 10.5 per cent discount to the five-day volume weighted average price.

Credit Corp reported 20 per cent growth in revenue and 15 per cent growth in net profit for the December half, with its Australian, New Zealand and US businesses all making a contribution.

Yesterday the company provided an update, saying that for the nine months to March debt collections in Australia and New Zealand were up 9 per cent.

The onset of COVID-19 resulted in Australian and New Zealand collections falling 15 per cent below previous expectations and US collections falling 16 per cent below expectations.

Applications to the company’s consumer loans division, Wallet Wizard, have halved and, combined with tighter underwriting, have led to an 80 per cent decline in loan settlements in recent weeks. Arrears have increased 2 percentage points.

The company said it expects greater debt buying opportunities, as loan delinquencies rise.

“Increasing capital headroom maximises Credit Corp’s flexibility to respond to market conditions, including the potential for one-off secondary purchasing opportunities,” it said.