NZ Fintech is the company behind Zooma. Photo / Supplied
NZ Fintech is the company behind Zooma. Photo / Supplied
The company behind consumer lending brand Moola is looking to raise up to $30 million to expand into vehicle financing and is eyeing a stock exchange listing as part of a longer-term plan.
NZ Fintech Group Holdings has already raised $50m in institutional funding through US funders Partners for Growthand Australia's Alceon which is headed by former JPMorgan Chase banker Trevor Loewensohn.
Edward Recordon, founder and chief executive, said now it was looking to tap up both wholesale New Zealand investors and local institutions to top up the funding round by $20m to $30m over the next 12 to 18 months.
"We have managed to raise a big institutional facility from Silicon Valley and an Australian syndicate so that's $50m and then we want to pair that with some New Zealand money because the institutions - they fund 80 to 90 per cent of the loan and then we have got to fund the balance. That is quite typical for most finance companies to operate like that."
Recordon said the company had already spent $5m to $6m on running trials for its new vehicle loan business which will be called Zooma.
"We have done a lot testing over the last couple of years because to get into any finance market, if you are going to borrow a lot of money you need to have a lot of proven results behind you otherwise it makes it very very difficult to get money."
Recordon launched Moola in 2013 and has spent $8m over the last seven years building up the brand. In 2017 it won the Deloitte Fast 50 award for technology.
Zooma will aim to build up to 400 to 500 vehicle loans a week with an average loan size of around $13k.
"We have been in unsecured loans for a long time with Moola and so we were looking around for another audience and market."
"Vehicles obviously springs to mind because everyone needs a car and what we found is there are very few people that actually knew of a high street vehicle financier."
Most vehicle finance is done through dealers. Photo / Sarah Ivey
Recordon said most non-bank vehicle lenders were connected to car dealers.
"They do their marketing through their car yard rather than to the public. That led us on to thinking there is an opportunity there where like what we have done with Moola we have created a topline brand and that is ultimately the goal for Zooma as well is to create a brand that somebody down the street would know about."
Recordon said like its consumer finance business Moola, Zooma would target middle-income New Zealanders who earned around $50,000 a year and use its online lending platform to make it a frictionless process.
"You don't want obstacles when you are applying for finance, you want to make it really easy for people. Obviously you need to offer a compliant product but you can still do that - technology is really good at that. We have got a fully online process."
Recordon said the other gap in the market it saw was a lot of vehicle financiers were only lending to good credit-quality customers.
"Somebody with credit issues doesn't necessarily mean they are not going to repay the loan. A lot of the Moola customers are like that - we know from experience they do repay their loans.
"We are utilising a lot of our experience to operate this new model."
It hasn't been all plain sailing for Moola though with the business running foul of the Commerce Commission.
In March this year Moola agreed to refund approximately $2.8m to current and former borrowers following a Commerce Commission investigation into credit and default fees.
Moola agreed to the settlement with the commission, acknowledging the watchdog's view that it had charged unreasonable credit and default fees between February 2016 and July 2017.
NZ Fintech Holdings could look to a stock exchange listing in five years time. Photo / File
Recordon said it hoped to raise the capital by the end of the year and would start lending from November, although its plans had already been pushed back due to the Covid lockdown in Auckland.
"I would like to think it will start lending by November. But the last six weeks has certainly slowed things down.
"Auckland is probably 60 to 70 per cent of our market and I expect for Zooma it will be much the same. The loan volume goes down significantly because when people are at home they don't really have any requirement for money."
Recordon said he planned to hire an extra 40 to 80 people to staff Zooma and work out of its Christchurch offices - that would be on top of the 40 it already has working under the Moola brand.
Longer-term a stock exchange listing could also be on the cards.
"In our capital raising information we do state that is a possible exit for the company. But we are still four or five years away from something like that.
"It is certainly an option - exactly what Harmoney did. It is a good way of raising money but it does complicate things because you have to provide a lot more information every month and quarter on how the business is going."
