MoneyMe acquires fellow fintech pioneer SocietyOne
ASX-listed fintech MoneyMe is to acquire fellow fintech pioneer SocietyOne to boost revenue, customer and profit growth.
Based on MoneyMe’s share price $1.76 at market close on 16 December 2021, the total value of the consideration is $132 million, assuming 100% of SocietyOne shareholders elect for MoneyMe shares.
Clayton Howes (pictured), MoneyMe’s Managing Director and CEO said, “The SocietyOne acquisition combines two of the most widely recognised consumer credit disruptors to deliver immediate scale advantages and incremental revenue opportunities.
“The strategic acquisition will accelerate originations, revenue growth and cost efficiencies by migrating the SocietyOne operations onto MoneyMe’s highly efficient Horizon Technology Platform. SocietyOne’s rapidly expanding prime customer base will benefit from access to MoneyMe’s diversified product set and ability to deliver leading customer experiences.
“SocietyOne’s innovative credit score tool will be brought to the MoneyMe customer base and we will continue to explore various initiatives underway by SocietyOne, including their Banking-as-a-service partnership with Westpac.
“We are excited to be leading industry consolidation in-line with our mission to become the favourite credit provider for generation NOW.”
MoneyMe’s strategic rationale for the transaction includes:
- Significant operating leverage through increased scale: 72% increase in MoneyMe pro forma1 loan book size to $934m (30 November 2021); material operating leverage benefits as SocietyOne business migrated to MoneyMe’s Horizon platform
- Material cost synergy opportunity: $17m p.a. (pre tax) by removing duplicate functions, systems, premises, processes; incremental opportunity to lower funding costs through accelerated securitisation
- Large revenue synergy opportunity from SocietyOne customer base: MarketMoneyMe’s diverse product suite to SocietyOne’s unique and high-quality customer and introducer base; SocietyOne customer experience “turbocharged” with Horizonplatform – reduce time to fund from ~1-2 days to ~1-2 hours
- Unlocking new distribution opportunities: Expand broker channel, with optimised user experience on Horizon; accelerating financial wellness channel, leveragingSocietyOne’s credit score product with ~147k customer base (a low-cost channel);Banking-as-a-Service partnership opportunity with Westpac
- Leverage power of combined data: Over $2b of combined customer origination data, enabling increased revenue and improved credit risk management through advancements in credit underwriting, artificial intelligence (AIDEN), marketing and customer behaviour analysis
Key Transaction Terms
The consideration offered to SocietyOne shareholders is up to 75.2m MoneyMe shares (“Scrip Consideration”). A cash consideration option has also been offered and a condition of the transaction is that shares representing no more than 7.5% of SocietyOne elect cash. The total cash consideration is set at a maximum of $9.7m assuming 7.5% of SocietyOne shareholders elect cash. Shareholders representing 79% of SocietyOne have signed the MIA and 78% have elected to receive the Scrip Consideration.
If 100% of elections were for Scrip Consideration, SocietyOne shareholders would own 30.5% of MoneyMe post transaction and MoneyMe would issue 75.2m MoneyMe shares as consideration. If 92.5% of elections were for Scrip Consideration, SocietyOne shareholders would own 28.9% of MoneyMe post transaction and MoneyMe would issue 69.6m MoneyMe shares as consideration.
