Shareholders in Xinja Bank are continuing to pay more than A$4 dollars a share to acquire new equity in the business, according to the company’s latest filing to the Australian Securities and Investments Commission.
While other startup banks and fintechs have recently been forced to discount pricing on new share issues to replenish their capital positions, Xinja scrip appears to have held its value with retail investors despite a fierce cash burn on its high yielding deposit account and the stalled rollout of revenue-generating loan products.
According to documents lodged with ASIC this week, Xinja since the start of June has issued more than 2.5 million new shares priced at $4.08 each.
The new scrip, which was issued on 11 September, is fully paid and has reeled in an additional $9.66 million of fresh capital for the bank.
Xinja has now raised almost $103 million through equity subscriptions since it was established three years ago.
The company is still waiting for the first tranche of a massive $433 million investment to arrive from UAE-based investment bank, World Investments.
While WI chief executive Zayed Bin Aweidha confirmed to Banking Day on 22 July that the investment was proceeding, Xinja has not been able to indicate with any precision when the capital is likely to land in Australia.
Bin Aweidha said in July the COVID-19 crisis had disrupted the operations of his company and also stalled the regulatory process in Dubai to approve the transaction.
“We are doing it; we are working on it. We will let you know when we proceed,” Bin Aweidha told Banking Day in July.
That Xinja has been able to continue issuing new shares on the same valuation that applied in the pre-COVID environment is remarkable given that local fintech peers have had to swallow big discounts to get fresh capital in the door.
Earlier this month the AFR revealed that Volt Bank had to slash the pricing on a recently completed capital raising by almost 50 per cent.
The effect of the repricing was to reduce the valuation on Volt Bank from $285 million to $150 million.
Maintenance of Xinja’s market value is likely to hang on renewed support from its investor base and the arrival of the WI cash.
It also depends on the opening of material revenue streams from personal loans and mortgages.
According to a strategic roadmap published on the Xinja website the rollout of these loan products is slated for completion by the end of this year.
Disclosures on the Xinja website indicate that the bank’s chief executive Eric Wilson is expected to deliver a strategic update to investors in the next few weeks.