by James Eyers
A digital payments start-up that makes all its earnings in the Philippines is set to list on the Australian Securities Exchange next week, joining more than a dozen listed fintech companies hoping to be swept up in the momentum driving global tech stocks.
Peppermint Innovation has built an app used by 45,000 of the customers of three of the biggest banks in the Philippines and is also building a remittance platform in an attempt to create a Filipino version of M-Pesa, the mobile payments app that took Kenya by storm.
Michael Eidne, head of industrials at Perth broker DJ Carmichael in Perth, said companies like Peppermint are tapping pools of risk capital in Perth, as former speculative investors in the mining industry look for other alternatives among the ASX’s minnows.
Peppermint Innovation is ready to list through the shell of Chrysalis Resources and is expected to have a market capitalisation of around $18 million, after it raised $3.87 million in equity last week, which will be deployed to market and deepen distribution relationships for the platform, working capital and product development. The ASX has indicated the listing will take place in early December.
With 75 per cent of Filipinos currently un-banked but mobile phone penetration at 100 per cent, Peppermint’s Australian senior management team is working on relationships with marketing companies MyWeps and 1BRO, which has around 60,000 agents in 40 business centres around over the country.
A GROWING GANG
Peppermint will join a coterie of fintech players listed on the ASX. These include recent debutantes ZipMoney, whose stock is up 50 per cent in the past 10 days after listing in September, and marketplace lender DirectMoney, whose shares have halved since its July listing.
The poster child for the listed fintech sector is OzForex, which listed in October 2013 and is currently considering whether to grant Western Union exclusive due diligence after receiving a $888 million takeover offer last week.
Other listed fintech companies to have seen their share prices rise in recent weeks include stockbroker data platform GBST Holdings; investment and superannuation platform Hub24; mobile payments and mobile marketing company Mobile Embrace; and point-of-sale software Touchcorp, which now has a $250 million market capitalisation.
Trading in other listed fintech players has been volatile, including Mint Payments; wealth management platform Praemium; payments firm Smartpay; robo advice platform Decimal Software; and Digital CC, a bitcoin miner.
The second ASX-listed bitcoin miner, The Bitcoin Group, is set down to hit the ASX boards on December 11 after a rocky process.
AN EASY PLACE TO RAISE MONEY
Mr Eidne said more start-ups should explore ASX fundraising in the absence of deep venture capital markets. “Smaller companies managing to innovate in niche markets are doing well but the rubbish will also get found out,” he said. “The ASX is an easy place to come and raise money through through shells. It is not overly expensive.
“We have speculative capital in Perth looking for home now mining struggling. It is not difficult market to list onto given the history of mining exploration companies, but it is also a heavily regulated market once you are on it. This is a fantastic combination.”
DJ Carmichael recently raised money for social media start-up migme, a social network focused on India, Indonesia and the Philippines, which is also moving into payments. Its shares are trading 150 per cent above its level at the start of December last year, bringing the company’s market capitalisation to $260 million.
Peppermint’s CEO, Chris Kain, is a former banker from Barclays Capital, CSFB, National Australia Bank and Macquarie. He secured the the core technology for Peppermint and core team, who have been working together since 2009, just over 18 months ago after previous management ran into difficulties with a multi-pronged set up in the United States and Dubai.
He says the opportunity in the internal remittance markets are large given for the un-banked, most money transfers are done manually with couriers or taxi drivers charging up to 9 per cent to move cash where the Peppermint platform offers 2.5 per cent to 3 per cent.
A “solid business” could be built from winning 10 per cent to 15 per cent market share, he reckons. Peppermint will also look to expand into international remittances to the Philippines, which receives $US28 billion of remittances annually.
Mr Eidne said DJ Carmichael will co-run the TechKnow sessions again in April next year after 450 investors attended sold-out sessions in Sydney, Melbourne and the Gold Coast in October.
“There is really strong interest in the technology but education needs to take place,” Mr Eidne said. DJ Carmichael is seeing three to four potential deals a week and there is “some rubbish presenting itself at far too early an stage,” he said.