The Splitit Ltd (ASX: SPT) share price will be on watch on Wednesday following the release of a positive announcement from the Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) rival.
What did Splitit announce?
This morning the global monthly instalment payments solution provider announced that it has signed an agreement with Israel-based Shaked Partners Fund for an interim finance facility which will enable Splitit to continue to grow its funded merchant business model.
According to the release, the facility is for up to US$8 million (~A$11.6 million) and has the flexibility to be drawn down in three tranches over the next 11 months and matures 24 months after each draw down. The facility can be deployed by Splitit in all the markets in which it operates.
Management advised that Splitit will use the facility to provide funding alternatives to certain approved merchants, whereby the merchant will receive an upfront payment of the full purchase price in exchange for the purchase of a merchant's receivables by Splitit.
In addition to this, the release advises that Shaked Partners will receive 2,000,000 options in Splitit with an exercise price of 50.1 cents per option. This represents the average closing price of its shares over the 10 business days immediately preceding execution of the financing agreement. These options may be exercised up until September 2024.
The company's CEO, Gil Don, said: "This new finance facility is flexible and global. It can be utilised by Splitit to help us serve merchants all over the world, under our funded merchant business model. As an important interim financing solution, it will allow Splitit to be nimble and to provide funding where it is needed most, thereby supporting us to grow on a global level."
Should you invest?
Whilst this is a positive development, I don't believe it is a game changer. As a result, I would stick with Afterpay and Zip Co if you're looking for exposure to the fast-growing buy now pay later market.
