Private equity investor FinCap Australia has acquired a substantial shareholding in buy now pay later minnow Payright, investing A$5.5 million via a share placement and convertible note.

Conversion of the notes would give FinCap a 19.6 per cent shareholding in Payright. FinCap chair Christian Ryan will join the Payright board.

Payright has also finalised a $125 million warehouse facility with Goldman Sachs as senior lender and iPartners as mezzanine arranger.

The company said in a statement that the new warehouse and the equity raising will reduce its cost of funds, strengthen its balance sheet and allow it to “accelerate its growth strategy”.

Payright is a small player in the BNPL market, with 3617 merchant stores and total merchant sales of $61.9 million in the six months to December.

Without the latest funding it would have faced serious questions about its future. It made a loss of $6 million on revenue of $7.8 million in the half-year. Cash outflow from operations was $25.1 million and cash on the balance sheet was around half that amount.