Payments solutions provider, Spenda Ltd (ASX:SPX) today announced it has signed a ten-year service agreement to provide software and ecommerce payments infrastructure to Capricorn Society Ltd, a member-based organisation that supports businesses in the automotive industry.
The markets reacted swiftly to this news, with shares trading up as much as 15.38% just after midday.
Capricorn has a network of over 26,000 members and more than 2,000 preferred suppliers in every state and territory in Australia and New Zealand, with members purchasing around $270 million in parts per month from the approved supplier network.
Under the agreement Spenda will receive $443,000, upon successful completion of the final phase, as well as $1.3 million in initial development fees for commercial launch in 2024, plus minimum recurring revenue of $100,000 per month software licensing fees, scaling over 10 years.
Spenda CEO and managing director Adrian Floate said: “The signing of this binding term sheet with Capricorn represents a transformational commercial opportunity for Spenda.
“Over the past five months, we have been working closely with the Capricorn team to deliver a payments solution to enable all Capricorn Members to access eCommerce payment solutions that are powered by Spenda. We are in the final phase of the Foundations Stage of the DSD project and on track for commercial launch in early 2024.
“The terms sheet provides both parties with clarity on the long-term commercial terms including the opportunity for a possible cornerstone investment. This represents a significant partnership for both Spenda and Capricorn that lays the foundation for long-term growth for both parties over time.
“Spenda’s potential to benefit from increased ecommerce volumes on this payments infrastructure, through Capricorn’s 26,000 members and 2,000 preferred suppliers, is significant.”
Cornerstone investor terms agreed
The agreement also includes agreed cornerstone investor terms. Through to January 31, 2024, Capricorn may subscribe for up to 412 million shares in Spenda — up to 9.97% of Spenda’s share capital post investment — via a private placement at 1.75 cents per share, a 77% premium to the 30-day volume weighted average share price of 0.99 cents.
Spenda partners with AgriChain to enter new agricultural vertical
Today’s announcement follows news yesterday that Spenda has partnered with AgriChain Pty Ltd to integrate early payment services to grain growers into the AgriChain Platform.
The company views this partnership as a significant operational milestone in expanding into the agricultural vertical and says it is also well positioned to expand into the livestock and horticultural markets under existing and new partnerships.
Splenda will integrate its early payment services to grain growers into the AgriChain Platform that connects a network of around 10,000 buyers and sellers in the agricultural supply chain.
It will provide an early payment program (EPP) to AgriChain’s customers, providing a card blended finance solution delivered through its payment widget product and integrated into the AgriChain solution.
The EPP will focus on farm storage and third-party stored grain for direct trading, farm input supplies for direct trading to farmers and manufacturers of various raw commodity and finished products.
The Spenda AgriChain Solution will be rolled out in two distinct commercial phases. Phase one will commence in the current quarter, engaging only a small portion of AgriChain’s customer network.
Revenue from the onboarding of the initial users will commence at that time and is expected to be up to around $1.5 million per annum. Spenda and AgriChain will revenue share 75%:25% respectively.
Phase two will commence upon the successful completion of phase one and is anticipated to scale up significantly in 2024, with the roll-out of the Spenda AgriChain solution to all eligible AgriChain customers.
Floate said: “This is a transformational deal for both Spenda and AgriChain. The unique solution solves a genuine market need for payment automation for grain stored on farm. The partnership will bring significant benefits to buyers and sellers in the AgriChain community and set the benchmark for payments in on-farm stored grain trading.
“This partnership also highlights the versatility and application of our payments solutions to new verticals, from franchise groups and online marketplaces to cross-border trade and now agricultural trading networks.”