Three’s a Crowd – 3 Fintech IPOs to Hit ASX in Coming Weeks

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It’s fintech IPO season down under, with three companies planning to list on the Australian Stock Exchange (ASX) in the next few weeks; ChimpChange, Kyckr and Coassets. The last two plan on leveraging the services of another Australian fintech startup, OnMarket BookBuilds, to attract investors. OnMarket BookBuilds claim to be the world’s first free-access portal into capital raising’s.

It’s a contentious time here in Australia for IPOs in general, with the ASX recently proposing plans to cut back the number of shareholders who are required to participate in a listing, from 300-400 to just 100 for large IPOs. Many, like OnMarket, see this as a direct threat to small investors and are petitioning the ASX to scrap the changes. If the proposal is successful, it certainly doesn’t bode well for other fintech IPO’s coming through the pipeline over the next few years.

But, while there’s still a chance for every day stock market punters to turn a dollar before the big institutions do, here’s the low down on one upcoming IPOs, automated KYC startup Kyckr, due to list on the 8th of July.

About Kyckr

Kyckr Limited is a new entity that has been incorporated in Australia in order to acquire existing compliance business Global Business Register Limited (GBR).  Today GBR connects into 150 business registers globally across 88 countries, automating KYC checks for banks, non-banks and domain and SSL providers. Depending on the region, its connections into registers are made via an API, a live data scrape or are conducted manually by customer service agents. Fintech clients on its books include Stripe and PayPayl, with big tech and financial players like Dell, Bank of Ireland, American Express and Swift also listed.

The business has indicated money raised will go towards further global expansion and towards building a compliance platform on the blockchain. In this regard they aim to be one of the first ASX-listed companies to do so. Kyckr competitors today include KYC.com, Avox, Clarient and SmartStream, to name a few.

Revenue model

Kyckr splits the current GBR revenue generation into two models:

  • People model – one time revenue, with a charge per report issued.
  • Automation model – recurring revenue for ongoing monitoring.

53 percent of 1H FY16 revenue was attributed to its automated model, with the company looking to transition most of its client book to recurring, clearly a far more attractive proposition to investors.

Competitive advantage

Kyckr claim a key differentiator (among many) is in the fact their GBR platform accesses data in real-time, rather than extracting and storing data in their own repository.

Risks

A Tower 81 research report has highlighted a possible lack of adaptability of existing APIs if and when rules around AML/CTF and KYC laws change, which could lead to issues with existing client integrations. Other risks flagged by the company in its own prospectus are its inability to register key intellectual property rights in Australia and technology that is not protected by any registered patents in any jurisdictions. There’s no question the regtech space is heating up – see last weeks regtech wrap for our Daily Fintech coverage – so copycats aren’t out of the question.

Listing Details

Kyckr will be listed on the ASX under the ticker KYK on the 8th of July 2016. The company is looking to raise between $5 and $6 million, with 30,000,000 shares on offer at a offer price of $0.20 per share.

Opinion

As someone who heads up a business fintech banking line that is directly impacted by on boarding constraints around KYC, anything real time and API driven will always be a bonus. How plug and play the APIs are is a question mark, as each financial institution has its own compliance models and risk tolerance profile. Could smart challenger banks who are already API driven simply build their own connections to registers, negating the need for a Kyckr? On a local scale maybe, but on a global scale, this would be hard and where the GBR platform could be leveraged. At some point, compliance starts to bite for fintech startups, and if Kyckr can find the right price point to compete against the large incumbents, they might just carve out a nice little niche for themselves in the space.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

 

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