Harmoney lists on the ASX

Harmoney has listed on the Australian Securities Exchange (ASX) with a foreign listing on New Zealand’s Exchange following its $92.5 million initial public offering (IPO), with a market capitalisation of $353 million.

Trading in shares in the online direct personal lender (Harmoney Corp Limited), which operates across Australia and New Zealand, began on a normal settlement basis on the ASX yesterday.

According to the personal lender, the IPO was well supported by institutional and retail investors across Australia and New Zealand, with applications exceeding the IPO offer size, of which around $70 million (before costs) will be used to fund Harmoney’s growth as it increases originations in the two countries and the funding of loans by bank-funded warehouse facilities.

Commenting on the ASX listing, CEO and managing director David Stevens said: “The evolving nature of the Australian and New Zealand personal finance market represents a highly attractive growth opportunity for Harmoney, with the company’s strong historic record of loan originations, proprietary Stellare technology platform, major bank warehouse funding facilities and high customer satisfaction.

“Today’s listing is a significant milestone for enabling the acceleration of growth across the Australian and New Zealand markets.”

Harmoney board chairman David Flacks said: “Today marks an important milestone for Harmoney, a young company that is proud to have made the transition to public markets where it can continue its growth trajectory.

“We’re pleased with the support we’ve received from existing shareholders, who are aligned with our board, management and staff in holding a cumulative 72 per cent stake in the company post listing. The focus is now on delivering growth to create sustainable value for all shareholders.”

Voluntary escrow arrangements are in place for all major existing shareholders, including founder Neil Roberts and Mr Stevens, with 72.3 per cent of the total shares on issue to be subject to voluntary escrow arrangements.

The Harmoney board includes Mr Flacks as independent chairman, Tracey Jones as independent non-executive director, and Mr Roberts and Mr Stevens as non-independent executive directors.

The lender is undertaking a search to appoint a third independent non-executive director.

The lender said Australia represents a significant opportunity, where the total addressable personal lending market is around $150 billion.

According to the Australian Bureau of Statistics’ Lending Finance data, since 2015, the estimated market share of personal lending seized by non-bank lenders has grown from 9.2 per cent to 46.9 per cent in November 2018.

This growth has been attributed to key structural factors such as a significant shift in consumer preferences towards online services and technological innovation.

Operational update

Harmoney has reported that it has exceeded prospectus pro forma forecasts for the four months to October 2020 (on an unaudited basis) to deliver total income of NZ$27.0 million ($25.6 million) and cash net profit after tax of NZ$1.6 million ($1.5 million).

Period end loan book was 1 per cent lower than the prospectus forecast at NZ$477,654 ($452,432) due to a weaker Australian dollar compared with the New Zealand dollar, and slightly higher customer prepayments.

Loan originations for the four months to October 2020 were NZ$114.5 million ($108.5 million), of which NZ$36.2 million ($34.3 million) was originated in October 2020, a 125 per cent increase from June 2020.

Payment holidays as at 31 October 2020 were at 3.4 per cent compared with the prospectus forecast of 3.7 per cent.

Loan origination volumes are up 12 per cent in the first half of November 2020 compared with the same period in October 2020.

Statutory reporting

Harmoney’s first statutory reporting as an ASX-listed company will comprise its interim results for the first half-year period to 31 December 2020, which is due for release in February 2021.

Since originating its first loan in August 2014, Harmoney has originated over NZ$1.8 billion ($1.7 billion) in personal loans, growing at a compound annual growth rate of 86 per cent between FY15 and FY20.

It has lent to more than 47,000 customers across Australia and New Zealand, with a total current loan book of around NZ$472.0 million ($447.1 million).

[Related: Heartland restructure to aid Australian business]