Afterpay mulls a US listing: Is this a loss to the Aussie ecosystem?


Afterpay co-founder Nick Molnar. Source: supplied.

Aussie tech success story Afterpay is considering a listing in the US, but that doesn’t mean it’s forgetting its Aussie roots. And the listing could ultimately be a bolster to the local ecosystem, rather than a loss.

In its Q3 FY 2021 business update the Aussie fintech announced it is working with external advisors to “explore options for a US listing”, given that the US is now the largest contributor to the business.

Afterpay reported sales were up 211% year-on-year in the US, and 277% in the UK.

The North American market is also now the largest contributor to underlying sales.

In March, the US became the Afterpay’s first region to record more than $1 billion in underlying sales in a single month.

If the listing occurred, Afterpay would remain headquartered in Australia, the statement said. But, its shareholder base is “increasingly becoming more globally focused”.

“A US listing would further accommodate this growing interest.”

There is no timeline laid out for such a shift yet, and any new listing would be subject to market conditions, approval from the US exchange in question and other prerequisites.

However, the announcement is a clear statement of intent.

It raises the question as to what — if anything — this means for the Aussie tech ecosystem. Should we be concerned that one of our best and brightest startup successes is flying the nest?

Rebecca Schot-Guppy, chief executive of FinTech Australia, says not.

“We need to shelve this debate on where a company lists,” she tells SmartCompany.

All tech listings should be celebrated, she adds, noting that many businesses choose the ASX over other markets.

The fintech ecosystem is especially buzzy at the moment, and Afterpay has driven much of that buzz.

“What we should really examine is what impact the location will have on a broader industry, and in this case, it’s a huge benefit for our sector,” Schot-Guppy adds.

Speaking to SmartCompany, Right Click Capital partner Benjamin Chong points to the sheer number of listings on the ASX last year — many of which fell into the tech index, with fintech well represented.

About $5.3 billion of capital was raised on the ASX in 2020, he says.

However, in contrast, the New York Stock Exchange raised some US$79 billion ($102.4 billion) in IPO proceeds. The NASDAQ, which typically houses tech stocks, saw almost US$78 billion ($101.1 billion) raised.

“There is no doubt there are much deeper capital markets in the US, but there is also a much greater amount of competition.”

Chong says it would be disappointing if Afterpay was to move entirely to the US. But, there’s always the possibility of a dual listing, by which the business is simultaneously listed in the US and Australia, through two companies that effectively operate as one.

Being listed on the ASX has been good for Afterpay, he explains. Its performance over the past 12 months in particular has drawn a huge amount of media attention, which has only built up its profile and increased brand recognition.

Either way, Chong suggests a US listing was something of an inevitability. If any startup’s largest customer base is overseas, it stands to reason it will move to meet them. Gaining access to the local capital market “does sound very sensible”.

And, with Afterpay remaining headquartered in Australia, the local ecosystem will continue to reap the benefits.

Schot-Guppy notes that Afterpay’s international growth “promotes the talent and ingenuity of our local fintech sector on a global stage”.

It effectively shines a spotlight on Australia as an ecosystem that can grow wildly successful tech businesses.

And, when either the founders or early team members sell some of their shares, that capital will come into the Aussie ecosystem, too.

On balance, Chong suggests that while it’s a little sad to see Afterpay spreading its wings and going off into the big, wide world, the move simply indicates this business is maturing.

In successful ecosystems, this is what happens, he says. As long as Afterpay remembers its roots, “it’s more positive than it is negative”.


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