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Laybuy set for Australia listing as "buy now, pay later" sector booms

* Laybuy shares to start trading at 12 PM local time (0200 GMT)

* IPO funds to be used for growth in the United Kingdom

* BNPL firms benefiting from an online shopping boom due to COVID-19

Sept 7 (Reuters) - New Zealand’s Laybuy is listing in Australia on Monday at a time when the buy-now-pay-later sector is being propelled by an online shopping boom sparked by COVID-19, forging one of the hottest investor spaces during the pandemic.

The explosive growth hit a roadblock last week when PayPal Holdings announced its entry, causing a sector-wide sell-off in Australia and exposed the frailty of these high-priced companies, which are heralded as disruptors of traditional credit.

Laybuy’s initial public offering (IPO) raised A$80 million ($58 million), and the company will use some of it to fund growth in the United Kingdom, a market already flush with larger competitors such as Afterpay and Sweden’s Klarna.

“I think the reality is in the UK, there are only three players, and Laybuy is one of them,” Gary Rohloff, Laybuy’s co-founder and managing director, told Reuters.

The company had initially planned to list earlier this year but delayed those plans after the pandemic struck, only revisiting them after the sector’s popularity grew rapidly among customers and investors.

Laybuy is selling about 56.8 million shares at A$1.41 per share and will begin trading at 0200 GMT.

Founded four years ago, Laybuy allows shoppers to buy goods and settle their dues over six interest-free weekly instalments, and makes the most of its money by charging merchants a commission.

And unlike some rivals, they conduct credit checks on their largely millennial customers, which Rohloff says can improve their credit scores.

The loss-making company also partners with a number of English Premier League football clubs including Manchester United, Manchester City and Arsenal. Laybuy currently has close to 500,000 active customers as of June.

According to the company’s prospectus, it has a unit in the United States, signalling a possible expansion into a country seen as the sector’s largest growth market. ($1 = 1.3765 Australian dollars)

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