FROM THE AUSTRALIAN 29/12/21 9pm.
The Bank ofQueensland has engaged advisers as it sizes up buy now, pay later firm HummGroup – which this month said it had received multiple proposals for all orpart of its business.
Sources with knowledge of the BoQ discussions said they were atan early stage, although the bank has brought in Goldman Sachs to assist in theproposal.
Humm – which sells business and consumer BNPL products – thismonth said it had “received approaches from third parties to acquire all orpart of (the company)”. It did not disclose who had made the proposals.
The Australian’s DataRoom column has already reported thatLatitude Financial, one of the country’s largest consumer financial servicesfirms, had separately expressed interest in Humm’s non-commercial leasingbusiness.
BoQ and Humm declined to comment on Wednesday.
Humm has a market value of about $445m, but the companyestimates – and told an investor day in November – that the value of itscombined businesses would exceed $1bn if compared to the multiples its peerstrade at.
Announcing the approaches on December 20, Humm told the ASX that“the company intends to engage in relation to these proposals, to determinewhether they are capable of becoming definitive offers that are in the bestinterests of the company and its shareholders. There is no assurance that anytransaction will occur.”
It has appointed Flagstaff Partners and Minter Ellison to adviseon the potential offers.
Humm already has a number of partnerships in place, includingwith BoQ rival Westpac, MasterCard, the Velocity frequent flyers program andAir New Zealand.
The company, until this month chaired by founder AndrewAbercrombie, rebranded from its original FlexiGroup name in August 2020,raising $140m as it began an aggressive expansion into the buy now, pay latersector.
At the time, it had 2.1 million customers, similar to largerrival Zip Co, and had signed up 56,700 retailers. Despite this, its shares havenot had the same outsized performance as its buy now, pay later rivals such asAfterpay.
In October, Credit Suisse equities analyst Marco Vissers toldclients that Humm management expected BNPL services to account for about 40 percent of gross income in the medium term, with the British and Canadian businesscontributing at least a quarter of that income.
“Management noted it expects BNPL volumes to benefit from theeasing of restrictions and return to in-store shopping throughout (the 2022financial year), with the majority of volumes coming from larger-ticket itemsmore commonly purchased in-store,” Mr Visser wrote in a note.
“Management pointed to a solid pipeline of BNPL partnerships,being a mix of licensing and loyalty program opportunities.”
Both Humm and BoQ have previously flagged consolidation in theBNPL later sector.
The bank’s chief executive, George Frazis, this year said itwould be “really important to partner up with a leading player”.
Latitude has already launched its own BNPL product calledLatitudepay.
In a lengthy paper, Citi analyst Siraj Ahmed said Latitudepay’swebsite had shown strong growth – an increase of 86 per cent year on year toNovember.
Humm’s, however, had declined 29 per cent for the same period,Mr Ahmed wrote, although the rate of decline slowed slightly in comparison tothe year to September. “Note that Humm’s website visits could be understatedgiven there are two different URLs used by the company,” he wrote in a clientsnote.
HUM is the only BNPL where its net assets are almost twice its market cap. When these guys expand overseas, growth will be significant. IMHO, its inevitable that Bank of Queensland, together with advisors, will buy out this co. Shareholders need to remember that net assets currently trade at around $1.50-1.60c. Accepting a takeover offer below this is absurd IMHO, given that this doesn't factor in growth for HUM.
Credit goes to
@Paydirt
p,s, thought this would deserve a new thread
(20min delay)