- Novatti Group (NOV) has signed on two investors for its banking services subsidiary, Novatti B Holding Company
- The binding heads of agreement is for a cash subscription for up to $10 million worth of shares
- This is in addition to a technology contribution for up to $8 million of equity
- The capital will fund Novatti B Holding's full Authorised Deposit-taking Institution application to APRA
- Following the investment, the subsidiary will have an equity holding of $40 million
- Shares in Novatti Group closed 4.88 per cent higher, at 21.5 cents apiece
Novatti Group (NOV) has signed a heads of agreement which will sign up to two investors for its banking services subsidiary.
The heads of agreement
The binding heads of agreement was signed with Hong Kong-based Fortune Fund Investment (Asia) and Australia-based Sydney Digital Currency Exchange.
It will see a cash subscription for ordinary shares in Novatti B Holding Company (NBHC) for up to $10 million over three stages.
In addition, the agreement provides for up to a further $8 million in equity will be issued to investors in exchange for the provision of banking technology and support services.
What will the investment fund?
The capital will fund Novatti B Holding's pathway towards having a full Authorised Deposit-taking Institution licence.
Firstly it will find NBHC's Tier 1 capital requirement for its Restricted Authorised Deposit-taking Institution (RADI) licence. It will also fund working capital during the RADI period.
This licence allows the licensee to launch limited banking services while applying for a full banking licence from the Australian Prudential Regulation Authority (APRA).
Furthermore, the investment will fund the application for the full Authorised Deposit-taking Institution licence.
Novatti Group's CEO Peter Cook said the investment removes any funding uncertainty for the applications to APRA.
"We are delighted with this investment and what this means for Novatti’s banking services subsidiary following its comprehensive application to APRA for the RADI licence."
"The investment underpins what we expect to be a long-term partnership with this investor group for the growth and development of our banking services subsidiary," he continued.
Novatti Group is working towards creating a migrant services bank with a culturally appropriate, customer centric approach. This will be created through NBHC's wholly owned subsidiary Novatti IBA Pty Ltd.
Following the investment, the subsidiary will have an equity holding of $40 million.
Shares in Novatti Group closed 4.88 per cent higher today, worth 21.5 cents apiece.