Rent.com.au Ltd: Oversubscribed $2.5m Raise Set to Accelerate RentPay

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1.3k Views13 Jan 2022 08:00

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SUMMARY

Rent.com.au Ltd

Oversubscribed $2.5m raise set to accelerate RentPay

Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through their rental profile, rental bond and payments, and through a growing number of aligned transactional services. The company has announced it has secured binding commitments to raise $2.5m before costs through the issue of 41.67m shares at $0.06/share. The oversubscribed placement was done at a 1.6% discount to RNT’s last traded price of $0.061/share and was supported by existing substantial shareholders and new investors. We understand that this includes tech investor Bevan Slattery, who holds ~10% through his investment vehicle Capital B Asset Management, and fund manager SG Hiscock. Rent.com.au intends to use the proceeds to fast-track key RentPay developments and increase its marketing efforts for both RentPay and its core Rent.com.au platform. The company noted that it had seen increasing interest from real-estate agents in the RentPay product. Late last year, RNT announced a collaboration with Rental Management Australia (RMA), which manages more than $4b in rental assets across Western Australia, Queensland and Victoria. The partnership will see RentPay made available to ~6,000 renters with all new tenants having access to the platform which includes the Scorebuilder, the Savings Buffer and Safetynet features as well as allowing renters flexibility on payment timing while matching the rent cycle. We expect to see similar partnerships emerge over the course of calendar 2022. We have incorporated the placement in our model and our base-case valuation is now $0.28/share (previously $0.31/share).

Business model
Rent.com.au generates revenue from advertising and from rental products, with revenue for the latter derived from RentCheck, which verifies a renter’s identity and checks their record against the National Tenancy Database, from RentConnect which delivers an integrated utility connection and $100 gift card to renters in conjunction with AGL, and from RentBond, RNT’s “move now pay later” product which helps renters bridge the gap from one rental property to another by financing their bond online. The company’s RentPay app platform allows renters total financial flexibility in terms of how they make their rent payments while giving agents and landlords surety of payments on time. It also aligns Rent.com.au to the tenancy period, giving it an opportunity to engage with its audience for longer and extend the relationship into other revenue lines including insurance, telecommunications, loan and finance products.

Oversubscribed placement sets up Rent.com.au for 2022
Rent.com.au noted that it had initially set out to raise $2.0m but was well over-subscribed, closing it off at $2.5m. The company plans to use the funds to accelerate its marketing efforts for RentPay, having spent the past six months since its soft launch learning what marketing strategies worked and what it customers wanted. RNT will also use the funds to add new features and functionality to RentPay such as new payment choices, improved customer flows and rewards systems as well as increased marketing of its core platform Rent.com.au.

Base-case DCF valuation of $0.28/share
Our base-case DCF valuation for Rent.com.au is $0.28/share (previously $0.31/share) after adjusting for the additional shares being issued in the placement. In dollar terms our base- case valuation has lifted slightly to $125.3m from $123.0m. Our valuation is predicated on our expectation that RentPay will secure 5% of renters on its platform by FY23 and 20% by FY30. Evidence of faster-than-forecast takeup of RentPay together with the expansion of RentPay into other transactional products will likely result in our forecasts being revisited.

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