July 6, 2020 / 11:46 PM / a month ago

UPDATE 1-BNPL heavyweight Afterpay to raise $558 mln to capitalize on surging demand

(Adds details on raising, 2020 outlook)

July 7 (Reuters) - Australian buy-now-pay-later firm Afterpay will raise about A$800 million ($558 million) in a bid to capitalize on a surge in online shopping amid coronavirus-related lockdowns, the company said on Tuesday.

The capital raising includes a fully underwritten institutional placement to raise A$650 million, followed by a non-underwritten share purchase plan to raise a further A$150 million.

The capital raise is to accelerate investment in growing underlying sales and prioritize global expansion in the short term, including possible M&As, the company said in its statement.

“By raising capital today, we believe we will be in the strongest position possible to execute on our strategic initiatives and growth aspirations,” Afterpay CEO Anthony Eisen added.

Afterpay co-founders Eisen and Nicholas Molnar have also each agreed to sell 2.05 million shares, representing 10% of their respective holdings in the firm.

An accelerated shift to online shopping amid the pandemic, Tencent’s stake buy and U.S. expansion have helped the stock leap almost seven-fold since March.

The company reported underlying sales of A$11.1 billion in 2020 and said it was “well positioned” to exceed its underlying sales target of A$20 billion by the end of 2022.

EBITDA excluding significant items for 2020 is expected to be between A$20 million and A$25 million.

The Melbourne-based firm said it would launch in Canada in the first quarter of 2021, and had the potential to launch into other new markets in late 2020 or early 2021.

$1 = 1.4337 Australian dollars Reporting by Shruti Sonal in Bengaluru; Editing by Himani Sarkar and Stephen Coates

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