- Digital banking and payments company Novatti (NOV) has partnered with BC Investment Group to launch and operate its new banking business
- This business aligns with Novatti's long-term growth strategy but can only launch once it's granted a restricted banking licence from the Australian Prudential Regulation Authority
- Managing Director Peter Cook said Novatti is pleased to have secured a partnership with BC Invest, who brings a wealth of lending experience
- In return for a 19.9 per cent stake, BC Invest will contribute $2 million to Novatti's subsidiary, Novatti B Holding Company (NBHC), as part of a seed funding round
- Then, a further $13 million will be invested to help get Novatti's banking business off the ground
- Novatti is up 5.65 per cent and shares are trading at 65.5 cents
Novatti (NOV) has partnered with BC Investment Group to launch and operate its new banking business.
BC Invest is an international financial services provider who specialises in lending and managing assets.
Novatti is developing a new banking business as part of its long-term growth strategy and providing additional value to its existing businesses.
In April last year, the digital banking and payments company submitted its final application for a restricted banking licence, the Australian Prudential Regulation Authority (APRA) said it was holding off on issuing new banking licences after COVID-19.
Since then, APRA said it would recommence issuing banking licences in two phases from March 2021. Novatti is still waiting on receiving this licence but remains in regular contact with APRA.
"We are delighted to have secured this strategic partnership with BC Invest, who bring with them strong financial services capabilities, including through their existing lending operations, as well as key customer acquisition channel," Managing Director Peter Cook said.
Under the new partnership, BC Invest will invest $2 million into Novatti's banking subsidiary, Novatti B Holding Company (NBHC), as part of a seed funding round. In return, BC Invest will gain a 19.9 per cent share in NBHC.
Following this seed funding stage, NBHC may receive another $13 million in funding at a post-money valuation of $35 million. As part of this stage, Novatti plans to invest a further $3 million and BC Invest $2.5 million. This extra funding will be used to develop the banking business if and when APRA grants the banking licence.
The $3 million will be generated through a placement of 6.83 million shares at 43.9 cents. The placement and the seed funding round are expected to be settled on May 10.
"The $15 million of funds to be raised are more than sufficient to enable us to
launch the bank and operate under a restricted banking licence and in parallel progress the application to a full banking licence. BC Invest will accelerate our launch of product and customer acquisition," NBHC CEO Guy Carvalho said.
After this stage, Novatti and BC Invest will own around 57 per cent and 19 per cent of NBHC, respectively.
Novatti is up 5.65 per cent and shares are trading at 65.5 cents at 10:23 am AEST.