Laybuy scrip sinks on delisting plan

George Lekakis

Investor support for embattled buy now pay later provider Laybuy Limited evaporated on Wednesday after the company released details of its plan to delist from the Australian Securities Exchange.

In a stockmarket filing Laybuy’s board confirmed it would put the delisting proposal to a shareholder vote on 22 February, arguing that the planned move was in the best interests of investors.

“Since the Company’s initial public offering (IPO) and listing in September 2020, the Board has observed ongoing fluctuations in the quoted price of the Company’s shares and noted that the value attributed to a share has been largely independent of news flows, even when positive news has been released,” Laybuy’s directors told the ASX.

“This has caused the Board to question whether the market is fairly valuing the Company. 

“Undervaluation means that the placement of significant equity to investors at current market prices may be more dilutive to existing shareholders than if the Company was, in the Board’s opinion, more fairly valued.” 

Laybuy’s directors said that a delisting would allow for “a more objective and independent appraisal of valuation to take place”, without concern for an illiquid public market on the ASX.

Like most other Australian-listed buy now pay later companies, Laybuy has never reported a bottom line profit since its scrip began trading on the ASX.

Retail shareholders responded negatively to the announcement amid concern that they might have limited opportunity to sell their holdings following a delisting.

The share price slumped to a record low in early trading on Wednesday before closing down 36 per cent to 3.8 cents.

Trading in the stock was unusually high, with more than 20.5 million shares changing hands.

The average daily volume for Laybuy stock in the last 12 months is only 546,000 shares.

Many long-term investors who acquired the stock in 2020 are perched on large unrealised losses given that the share price was trading above A$1 until the early months of 2021.

The delisting proposal stands a strong chance of being approved given that cornerstone investor Pioneer Capital and interests associated with the company’s founder Gary Rohloff together account for close to 40 per cent of the issued equity.

Laybuy’s board said it had engaged a licensed New Zealand market operator known as Catalist to provide shareholders with a channel to trade in the company’s scrip.

Directors said they intended to facilitate weekly auctions of Laybuy shares on the Catalist Public Market.