Shares in fintech MoneyMe (ASX: MME) have jumped more than 12% in opening trade on Tuesday after the company announced a new $167 million warehouse funding facility led by Westpac, that will cut its funding costs by more than 50%.
The company put its shares in a trading halt yesterday pending the announcement. The deal will see MoneyMe refinance $60m of existing receivables immediately. The new warehouse facility is expected to include Australian Office of Financial Management (AOFM) mezzanine funding in October or November.
The new facility with a two year term and takes funding costs below 3.95% p.a (+ Bank Bill Swap Rate) on a fully drawn basis, taking the combined warehouse loan asset funding costs to below 5% p.a (+BBSW), down from 11.4% in FY20, following a refinancing from the existing Velocity warehouse on the October or November payment date.
MoneyMe says it will be introducing more competitive pricing and wider offers across its risk-based priced personal loans and other products.
The company says Q1FY21 will see over 43% growth in origination volume from Q4FY20.
MoneyMe CEO Clayton Howes said the Westpac deal was transformative for the company.
“This is a significant milestone that provides a step change in our funding costs, increases origination capacity and allows us to better compete on price,” he said
“It is an achievement made despite the Covid-19 operating environment and is testament to the business model, the economics and quality of the loan assets and the growth opportunity.”