* Laybuy shares up as much as 63% in first 10 minutes of trade
* IPO funds to be used for growth in the United Kingdom
* BNPL firms benefit from online shopping boom due to the COVID-19 (Adds shares on market debut, details)
Sept 7 (Reuters) - Laybuy soared more than 60% on its Australian debut on Monday at a time when the buy-now-pay-later sector is being propelled by an online shopping boom sparked by the COVID-19, forging one of the hottest investor spaces during the pandemic.
The New Zealand company’s debut performance was under the scanner after the sector’s explosive growth hit a roadblock last week when PayPal Holdings announced its entry, causing a sector-wide sell-off in Australia and exposed the frailty of the high-priced companies, which are heralded as disruptors of traditional credit.
Shares of Laybuy were up more than 50% at A$2.14 by 0227 GMT, from an initial public offering (IPO) price of A$1.41. This gave the latest BNPL entrant a market value of more than A$370 million ($269.51 million).
The IPO raised A$80 million, which the company plans to use to fund growth in the United Kingdom, a market already flush with larger competitors such as Afterpay and Sweden’s Klarna.
“I think the reality is in the UK, there are only three players, and Laybuy is one of them,” Gary Rohloff, Laybuy’s co-founder and managing director, told Reuters.
The company had initially planned to list earlier this year but delayed those plans after the pandemic struck, only revisiting them after the sector’s popularity grew rapidly among customers and investors.
Founded four years ago, Laybuy allows shoppers to buy goods and settle their dues over six interest-free weekly instalments, and makes the most of its money by charging merchants a commission.
And unlike some rivals, they conduct credit checks on their largely millennial customers, which Rohloff says can improve their credit scores.
The loss-making company also partners with a number of English Premier League football clubs including Manchester United, Manchester City and Arsenal. Laybuy currently has close to 500,000 active customers as of June.
According to the company’s prospectus, it has a unit in the United States, signalling a possible expansion into a country seen as the sector’s largest growth market.
($1 = 1.3729 Australian dollars)
Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Saumyadeb Chakrabarty and Sherry Jacob-Phillips
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