Friday, September 22, 2023

Affirming prices above the range, yet another sign of a hot IPO market

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Affirm, the consumer lender led by PayPal co-founder Max Levchin, has sold shares well above its expected price range in a initial public offering, a sign of the continued exuberance of new listings in the United States.

The San Francisco-based company raised $ 1.2 billion in the offer after selling shares at $ 49 a unit, according to two people briefed on the matter, a price point that exceeded its already increased range of 41. at $ 44.

Affirm would have a market capitalization of $ 11.9 billion at the IPO price, based on the number of shares outstanding after the offer. The company declined to comment.

Affirm’s list extended a series of frenzied IPOs dating back to the second half of last year, while delivering a second big win for Mr. Levchin almost two decades after helping to bring PayPal to the public.

Founded by Mr. Levchin in 2012, Affirm offers a “Buy Now, Pay Later” product that online shoppers can use to spread payments on big ticket items. Affirm derives most of its revenue from fees charged to merchants, so customers often pay no interest. The company also offers interest bearing loans with no late fees.

Sales through Peloton, the fitness company, have historically produced a large portion of Affirm’s business, accounting for 28% of the company’s total revenue in the 12 months leading up to June.

The company reported net losses of $ 113 million on revenue of $ 510 million in the 12 months ending in June, decreasing from losses of $ 121 million on $ 264 million of revenue during previous exercise.

A boom in the online consumer lending industry means it has faced competition from overseas groups like Afterpay and Klarna, as well as PayPal, which has introduced a buy now, pay later l ‘last year.

Affirm’s IPO comes during a busy week of new listings in the United States. E-commerce site Poshmark and mobile game company Playtika are also expected to go public in the coming days, offering a first test of the market this year.

At Affirm’s IPO price, Mr. Levchin would own a stake in the company worth nearly $ 1.4 billion. Since leaving PayPal, he has become a prolific investor, supporting tech start-ups through his company SciFi VC and building new businesses through a vehicle called HVF.

Singapore’s sovereign wealth fund GIC was Affirm’s largest outside investor, with a stake worth nearly $ 1.1 billion at the IPO price. Shopify, the Canadian e-commerce company, also held more than $ 990 million in shares that it received from a partnership with Affirm last year, which enabled the fintech company to offer its product. on Shopify merchant sites.

Morgan Stanley, Goldman Sachs and Allen & Co were the main underwriters of the offer.


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