New Zealand consumer lender Harmoney commenced trading on the Australian Securities Exchange yesterday, after completing an initial public offering that raised A$92.5 million. The company has a small presence in the local market but it has ambitions to change that.
The shares, which were issued at $3.50, finished the day at $3.45.
Since commencing operations in 2014 the company has originated NZ$1.8 billion of loans and currently has a loan book worth NZ$472 million. It set up its Australian office in 2017.
It provides unsecured personal loans of up to $70,000 for terms of three to five years.
It sells direct to consumer, originates online and has what is calls an “automated loan approval system underpinned by a scalable proprietary technology platform”. Borrowers typically get their money in 24 hours.
It does not work with brokers but it has commercial relationships with comparison sites, including Finder, Mozo and RateCity to support its digital marketing strategy. And it works with Google, using the Google Smart Bidding machine learning system to attract consumers.
Interest rates are risk based, with 25 credit grades in New Zealand and 20 in Australia. Borrowers pay between 6.9 per cent and 24.7 per cent in New Zealand and between 6.6 per cent and 25.7 per cent locally. Borrowers also pay establishment fees.
The average rate paid by borrowers last financial year was 16.8 per cent and the company’s average funding rate was 6.3 per cent.
In the year to June, Harmoney earned income of A$39.1 million in New Zealand and $7.4 million in Australia. The NZ operation made a pre-tax profit of $5.5 million, while the Australian operation made a pre-tax loss of $1.9 million.
The group made a loss of $6.9 million in the year to June, compared with a loss of $6.1 million the previous tear.
The impairment expense was 4.8 per cent of the value of gross loans.
After starting life as a peer-to-peer lender, it closed its P2P program in April this year and is now funded through warehouse programs in Australia and New Zealand. It established a $115 million warehouse in Australia in February this year.
The company is headquartered in Auckland and has 60 staff. Its chair is David Flacks, former senior corporate partner at law firm Bell Gully. The chief executive is David Stevens, a former CEO of Flexigroup.
The founder, Neil Roberts, is chief product officer and executive director, after having served as the company’s CEO in its early years. He is a former head of sales and business development at Flexigroup.