Ovanti Ltd (ASX: OVT) has announced a significant milestone in its strategic shift towards the US Buy Now, Pay Later (BNPL) market, confirming the sale of its 21% stake in Malaysian fintech i.Destinasi.Sdn Bhd (IDSB) for RM40 million (AUD $13.77 million). This sale is structured as a share buy-back by IDSB, rather than an acquisition by its majority shareholder, marking a critical step for Ovanti as it pursues its BNPL aspirations abroad. Settlement of this buy-back is expected within the next 30–45 days, pending final documentation.
Funding US Expansion Without Dilution
This transaction is pivotal for Ovanti, which has positioned itself to enter the competitive US BNPL sector without resorting to shareholder dilution. Ovanti Chairman David Halliday expressed optimism about the transaction, stating, “This is a major step forward in the process of realising value for one of Ovanti’s Malaysian, non-BNPL assets. The funds realised from a successful completion of the sale will provide significant, non-dilutive funding towards the company’s stated ambitions of expeditiously entering the US market with a BNPL offering.” This approach aligns with Ovanti’s commitment to minimising shareholder dilution, a consideration often top of mind in capital-intensive sectors like BNPL.
David Halliday
Strong Momentum from IDSB Investment
While the decision to sell its stake in IDSB represents a strategic shift, Ovanti’s IDSB investment has yielded considerable returns. The monthly dividend from IDSB rose by 57% in recent months to RM369,000, equating to AUD $128,000 per month. This robust performance highlights the investment’s value as it transitions from Ovanti’s portfolio, providing the company with the financial flexibility to shift focus to its core BNPL strategy.
Ovanti’s Operational Overview and Financial Health
Alongside this transaction, Ovanti has reported steady advancements across its operations. Its wholly-owned subsidiary, iSentric, recently secured a contract renewal with Bank Simpanan Nasional in Malaysia, underscoring continued demand for its digital banking and omnichannel services. The company also launched a WhatsApp omni-channel platform with Touch ‘n Go and Malaysia’s national electricity provider, positioning iSentric to handle millions of messages monthly as this platform gains traction.
Despite facing a cash flow deficit of AUD $1.63 million in the September 2024 quarter, Ovanti managed to improve its liquidity position by raising AUD $1.9 million through a recent share issue. This injection, alongside anticipated proceeds from the IDSB sale, is set to strengthen Ovanti’s balance sheet and support its BNPL ambitions. According to Ovanti’s disclosures, these funds provide critical runway, ensuring operational stability and facilitating its strategic expansion into the US.
New Leadership to Drive US BNPL Push
In preparation for its BNPL entry, Ovanti recently appointed Simon Keast as CEO. Keast brings substantial BNPL expertise from his tenure at Zip Co Limited, where he held key roles including US CFO and Managing Director of Zip Business Capital. His background in the fintech and financial services sectors adds a layer of experience essential to navigating the competitive US BNPL landscape.
Next Steps
With funds in hand from the IDSB sale and a specialised leadership team, Ovanti’s next move will be establishing a foothold in the US BNPL market. The company anticipates updating shareholders as the transaction finalises and it progresses with its market entry strategy. For Ovanti, the combination of a solid capital base and a clear strategic direction marks an ambitious new chapter in its growth trajectory as it taps into the high-growth US BNPL sector.
