Splitit plans to go private for stringent $60m capital commitment
Consumer business turned white-label Instalments-as-a-Service platform Splitit has received a “significant capital commitment” from private equity investors Thorney Investment Group, Parea Capital and Motive Partners at the price of going private.
Splitit receives $60m capital commitment
Motive Partners has committed to invest the majority of the capital, $50 million, which is to be delivered in two tranches when and if two specific stipulations are met.
The first of these stipulations is that the buy now, pay later (BNPL) vendor must delist from the Australian Securities Exchange (ASX) after four years of being publicly listed. Current shareholders must vote for the action, which if executed, would then give them the option of selling their remaining shares prior to the withdrawal or retaining ownership in the new private company.
The company’s filing indicates that the vote will be cast some time between late October and early November this year.
‘The best available opportunity’
A second stipulation in the first tranche requires Splitit to redomicile to the Cayman Islands via a reverse triangular merger in which the company merges into an Israel subsidiary to then be reincorporated in the Cayman Islands as Splitit Cayman.
A move scheduled for Q1 2024, the company says the redomicile to the Cayman Islands would, perhaps unsurprisingly, “significantly lower administrative costs” with the added benefit of “a more flexible operating environment, a superior ability to attract and retain talent, and improved prospects of accessing future growth capital at an attractive valuation”.
If both these stipulations are met, it will receive the first $25 million from Motive Partners.
The following $25 million will come if the company follows this up by achieving “certain 2023 full-year financial performance milestones and the satisfaction of certain customary closing conditions”.
This includes achieving “70% of 2023 target merchant sales volume, net transaction margin, and adjusted EBITDA; putable by Motive in its sole discretion no later than June 30, 2025”. However, the filing also indicates that the company is on track to meet these milestones.
When those bridges are crossed, the company will have received $50 million in total from Motive Partners, while Thorney Investment Group and Parea Capital are to supply the remaining $10 million via convertible note. These together bring the total amount raised by Splitit to around $350 million since being founded in 2012.
Dawn Robertson, chair of Splitit, says the board “unanimously concluded” that the proposed transaction is “the best available opportunity to create long-term value for Splitit’s existing shareholders”.
She describes Motive as “the ideal partner” as the company pursues future value creation, due to its “extensive payments expertise, value-additive capabilities and deep industry relationships”.
