Key Investment Highlights
ThinkSmart is a specialist digital payments platform business. It offers investors unique exposure to the UK ‘Buy Now Pay Later’ payments sector undergoing exponential growth, driven by ongoing digital transformation of consumer shopping habits and financial services.
In 2018 ThinkSmart sold 90% of its ‘Buy Now Pay Later’ payments platform to Australian fintech giant, Afterpay. A ‘Buy Now Pay Later’ option at checkout enables consumers to split the cost of their retail purchases into a number of more manageable interest free payments.
10%* Stake in Clearpay, a leading ‘Buy Now Pay Later’ platform in the UK, offers attractive exposure to high growth, eCommerce-led digital payments market
- Digital transformation and a highly receptive UK consumer have enabled explosive growth in ‘Buy Now Pay Later’ payment options
- Clearpay is one of the UK’s leading BNPL players, demonstrating outstanding trading momentum and attracting 1.6 million active customers in its first 18 months of trading. Major retailing brands including ASOS, M&S, JD Sports and Boohoo are on board
- Clearpay benefits from financial strength and global footprint of parent, Afterpay. Afterpay is quoted in Australia with a market valuation as at 1 March 2021 of AU$36bn
Clearpay holding provides exposure to increases in value in the high growth digital payments market
- The Clearpay holding was conservatively valued at £106.6m as at 31 December 2020 for ThinkSmart’s interim accounts
- By December 2020 Clearpay’s UK active customers accounted for in excess of 12% of Afterpay’s total global active customer base
Agreed pathway to value realisation of Clearpay stake
- ThinkSmart’s stake is subject to a put/call arrangement with Afterpay in 2023/24
- Arrangement is based on agreed valuation principles using same valuation metrics, multiples and methodologies, including those used by market participants and with regard to sell-side analysts, to value the Clearpay business within the Afterpay listed group
Point of Sale digital payments IP
- Significant historical investment in proprietary digital payments platform and credit decision making engine, SmartCheck
- Net cash positive contribution from operating business, which is in managed wind-down with receivables under management of £4.5m across c.10,000 active contracts at 31 December 2020
Highly conservative balance sheet underpins ongoing shareholder returns
- Net Assets at 31 December 2020 were £116.6m or 109.44p per share
- Net cash at 31 December 2020 was £6.9m, accounting for c6% of the NAV
- Clearpay sale in 2018 has to date generated capital/dividend returns of £11.3m with 10%* retained holding offering additional proximate value
Aligned management team and Board hold in excess of 40%
- Entrepreneurial management team with significant equity ownership have returned over £11.3m to shareholders since December 2018
*A proportion of the 10% retained shareholding (up to 3.5% of the total share capital of ClearPay) will be made available to employees of Clearpay under an employee share ownership plan.