Pioneer's $10m equity raise

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Danielle Ecuyer
Aussie FinTech Pioneer Credit has secured a $10 million investment from institutional investors, selling shares at $0.45 each. The company saying the cash injection is to buy more debt portfolios and bump up financial goals for the year. To get across the details, Keith John, Pioneer Credit CEO, joins me now. Congratulations on the equity raising.

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Keith John
Thanks so much, Danielle.

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Danielle Ecuyer
And it is quite chunky because if we it's a fifth basically of your market cap. So just give us some flavour or context around why you wanted to expand buy those debt portfolios at this point in the cycle. And why do you think the demand was so strong?

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Keith John
Yeah, thanks so much. I mean, from our perspective, it's probably a little bit more than we and we wanted to raise in the first instance. Certainly we had plenty of demand and we had some very strong support, which sort of led towards upsizing it from an original $5 million target to 10 to ensure that we could get the institutions that were interested and supported us for a long time since stock.

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Keith John
So the placement was done at a premium to market. It's very rare and I think we're very proud about that. But the opportunities in front of us are significant. We've been talking about them for a long time and this will give us the opportunity to really push the company ahead and push its profitability ahead in the next 12 and 24 months.

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Danielle Ecuyer
Okay. So you're going to increase buy more debt portfolios? Well, how are they looking at the moment? Because a lot of commentators might be quite cynical and say, well, at this point in the cycle, there's a lot of risk around potentially credit with interest rates having gone up so much, maybe some slowdown in economic growth. Ex of course, the immigration factor.

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Danielle Ecuyer
What would you say to the cynics?

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Keith John
Look, I mean, at Pioneer, our portfolio is predominantly built out of the big banks and the tier one type lenders across the economy. So we're buying the very best of the consumers that happen to have fallen on hard times for a period of time in an environment of full employment. Those consumer has come back on track very quickly and we can work with them through that to ensure that they can make their financial commitments.

00:02:30:12 - 00:02:53:15
Keith John
Certainly, you know, the environment is tough for a lot of people and that's that comes through in our portfolios as well. But it's reflected in price and reflected in the way that we liquidate our portfolios and work with consumers over time. So we're very comfortable with what we've got there, we’re very comfortable with what we're investing in. I think our results show that very, very clearly.

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Danielle Ecuyer
Which sectors are most of your credits sitting in, are we talking sort of mortgage arrears or motor vehicle financing or SMEs. Can you give us some flavour there?

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Keith John
For sure, most of our loans are sitting in personal loans and credit cards, we do have a little bit of auto. What we don't have is any payday or that really lower quality type segment. So our portfolio is very robust. We've got very small exposure to interest rates. So certainly our consumers do through, you know, through rental prices and the like and general cost of living.

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Keith John
But across our book, there's almost no mortgages in there. And that's certainly seen our performance carry on now very, very robustly for the last few years.

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Danielle Ecuyer
And are you expecting to continue to see growth in your markets?

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Keith John
Yes, it's been a great market for us. I mean, one of the very strong things about Pioneer is the way that we've been positioned for a very long period of time. We're a business which is always focused on quality and on what differentiates us from our competitors, and that's valued by the banks. So we've got a very big pipeline of opportunity that sits in front of us.

00:04:14:07 - 00:04:36:05
Keith John
Also, we've got less competition in our market than we've had in the past. Some of that is brought on by some of the pressures on other players around regulation and financing, and then others are competing with their own loan products, which Pioneer doesn't do. So when people are looking to sell portfolios, they're looking to do that to groups that are supportive of their business strategy, which Pioneer is.

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Keith John
And we do that

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Keith John
in a very structured way. It's very safe for the seller and very good for the consumer. And that's part of what to a large part of what's driving our growth.

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Danielle Ecuyer
Okay. And maybe you could touch on what you're looking for over the rest of the fiscal and also calendar year.

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Keith John
Yeah. So there's a few big catalysts, Danielle, for our business. The first is we're not far away from closing out of financing for our debt. We've been keeping the market updated on that. We expect to do that is half that will drop about $10 million straight to the bottom line of Pioneer, which is material in the size of our business.

00:05:18:04 - 00:05:50:19
Keith John
There is a mountain of opportunity in the market for us through some consolidation, but also with other groups bringing portfolios to the markets so, we've invested or forecast to invest 85 million in portfolios this year. We expect that to increase over the next few months and then certainly next year we'd be looking to invest north of $100 million and that's going to drive a lot of growth into our business and get us back to sort of $20 million plus profitability very, very quickly.