Australian invoice and equipment financier Earlypay has secured A$18.8mn in a capital raising to fund the expansion of its new trade finance product following a successful trial.

The Sydney-listed company says in a stock exchange filing that over the last year it has trialled a lending product to support small and medium enterprises (SMEs) to purchase inventory. When the inventory is sold, the debt converts to an invoice financing product.

“Without active marketing, Earlypay has built a A$10mn loan book over this period, with 15 to 20 active clients,” chief executive Daniel Riley tells GTR. “On review of its existing 450 invoice finance clients, Earlypay has recognised a broader opportunity to offer trade finance to this group.”

“This extension of Earlypay’s product will provide a full supply chain funding solution to existing clients and Earlypay anticipates strong take-up, improved customer satisfaction and an increase in income generation from the existing client base,” Riley says.

While the trial product was funded from Earlypay’s balance sheet, “the strong demand for the product has now exhausted Earlypay’s balance sheet capacity” and the newly raised funds will go toward growing that part of the business, the filing says.

The capital raising involves the issuing of almost 45 million shares at A$0.42, representing a 12.5% discount on the June 21 closing price.

The company says that it will begin transitioning trade and invoice finance customers to a new A$50mn warehouse lending facility in three months, which will allow it to significantly expand its trade finance book.

Established in 2001 as CML Group, Earlypay last year rebranded under its current name after acquiring non-bank lender Classic Finance Group in 2019 and invoice finance fintech Skippr in 2020.

The company’s filing says the move to warehouse financing will free up cash that will be used to repay bonds and possible further acquisitions.

Riley says the company’s clients operate in sectors such as “air-conditioning import and installation, engine components, manufacturing, food production and more” and the company is not currently eyeing international expansion.