Speculative Appetite Required for ChimpChange IPO
The ChimChange platform works on all devices and is designed to offer an alternative solution to traditional retail banking facilities.
ChimpChange Limited is the next start-up technology to list on the ASX, aiming to raise $15 million before costs. ChimpChange is focused on payment solutions and digital banking. The company issues debit cards and provides banking facilities which are managed through its proprietary payments and processing platform the ‘ChimpChange Platform’. The platforms is designed to offer an alternative solution to traditional retail banking facilities and is only available to US residents.
The ChimpChange platform is fully functional and the successful expansion of its product provides access to a market of scalable size in the US. Growing its customer base and transaction volumes will be the primary drivers in the short-term. We are also attracted to management’s track record in the industry, as the company benefits from the expertise of Peter Clare, previous CEO of Westpac New Zealand.
However investors need to be aware that ChimpChange is an early stage company and while the company has incurred losses to date it remains reliant on external capital. The payment industry is highly regulated, leaving the Company’s earnings exposed to significant policy risk in this area. With limited entry barriers for the industry, ChimpChange may be subject to increasing competition.
Overall we are attracted to management track record and total addressable market. Primary hurdles include reliance on external capital, regulation and competition. While expansion of its existing client network will be the primary driver, ChimpChange has yet to demonstrate commercial potential. Absence of near-term revenue and uncertain demand for its product require a high risk, speculative appetite.
Company: ChimpChange Ltd
ASX Code: CCA
Shares on Offer: 18.75m
Listing Price: $0.80
Market Capitalisation: $50.8m
Listing Date: June 30
The article was published first in The Australian
Author: Simon Herrmann
Jun 07, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.