Runs on banks, markets in turmoil, financial system strained - good luck valuing an Australian payments company!
Potentia Capital’s playing the waiting game at Tyro Payments, sitting back while uncertainty starts turning some of the company’s institutional investors a little crazy and particularly deal hungry.
Momentum has swung in Potentia’s favour in the past 10 days, since depositors started questioning the strength of their institutions and pulled funds from a handful of offshore banks. And while they wait, $1.60 a share is looking attractive to institutional investors, while talk of $2-plus seems to have vanished. Fund managers that were calling for $1.85 a month ago, now reckon a bid in the $1.70s should be enough.
In reality, Tyro’s banking solutions look more like working credit, rather than unsecured lending. Square has banking and lending products in the same markets, and these are short-dated loans backed with visibility over underlying cash flows, providing high margins. Tyro can assess risk on a daily basis.
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