Huljich family, Afterpay substantial investors in new BNPL & fintech fund

The wealthy Huljich family will join Afterpay and US firmWoodson Capital (a major shareholder in Afterpay) in backing an investment fund that will list on the ASX.

Touchstone Ventures (formerly AP Ventures) overnight released a Prospectus detailing plans to raise A$100 million ($104m) through an IPO on September 29 with an indicative market cap of A$285m.

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The two-year-old Touchstone already has A$75m invested in five startups across the hot buy-now, pay-later and fintech sectors (see below).

The prospectus says IPO funds will go to A$10 – A$25m stakes in unlisted companies “in the retail innovation, consumer, finance and data segments, that Touch Ventures considers to be in the growth stage of their development”. It plans eight to 10 investments in the medium term.

The Huljich family will come onboard Touchstone with the float through one of its private investment vehicles, and will shortly file an initial substantial shareholding notice involving a holding worth A$15m at the offer price of 40c per share, Peter Huljich told the Herald.

“We will not seek a board seat,” Huljich said. “But we will be making introductions to technology opportunities from New Zealand and the US where we feel it would be a good fit.”

The Auckland-based family recently raised $444m as it sold the remainder of its anchor investment in NZX-listed Pushpay across two bulk trades in July 2020 and March this year. Although it made its original fortune from investments including property and small goods, it has recently made a number of high profile tech investments. Beyond Pushpay, the family had a stake in Diligent Board Member services before its $1 billion sale to a US private equity firm. Its current tech investments include Valocity and AskNicely.

Touchstone’s offer of 250m shares at 40c per share is being managed by Bell Potter, and is set to open on September 14.

Today, the two largest investors are Afterpay, which holds a 32 per cent stake, which will be diluted to 23 per cent post-IPO and Woodson with a 10 per cent holding.

Woodson, founded by US investor Jim Davis, led a A$300m private equity funding round for Afterpay in 2019. Afterpay is now listed on the ASX, with a market cap of A$38.6b.

Touchstone – which invested in its portfolio between February 2020 and June this year – made a net loss of A5.1m for FY2020.

As of June 30, it had A$65m in cash.

Touchstone’s current investments are:

Sendly, which positions itself as a 100 per cent carbon-neutral digital parcel courier platform business which targets the e-commerce small and medium business merchant market in Australia and the US

Happay, a Chinese buy-now, pay-later operator

Play Travel (formerly LayAway Travel), an Australian firm that sells holiday packages on a buy-now, pay-later basis; and

Basiq, an Australian “open banking” startup that operates a financial data platform that allows financial institutions and fintechs to access and analyse their customers’ financial data; and

Postpay, a United Arab Emirates buy-now, pay-later firm that generates revenue from a merchant fee rather than the usual penalties for late instalments

Its prospectus notes that the pandemic increases bad debt risk for BNPL companies, while Play Travel has exposure to border restrictions.

However, it also says Touchstone plans to hold a typical investment for six to eight years.

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