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Afterpay to raise US stake, posts H1 loss

Steven DeareAAP
Afterpay is raising money to increase its stake in its US operations.
Camera IconAfterpay is raising money to increase its stake in its US operations.

Afterpay is raising money to increase its stake in its US operations, on the same day it posted a first-half loss.

The buy now, pay later provider on Thursday said it would raise up to $1.5 billion so it can increase its ownership of Afterpay US from 80 per cent to about 93 per cent.

The company will offer $1.25 billion in convertible notes, with an option to offer an additional $250 million.

This will help buy a stake from US venture capital firm Matrix Partners.

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Afterpay will also buy the shares of US employees.

UBS analyst Tom Beadle said the US division was worth about $10.6 billion, based on the capital raising details.

The company said the US market was its biggest opportunity and more consumers and businesses were using its service.

Americans comprised 62 per cent (8.1 million people) of Afterpay customers who made at least one purchase in the past 12 months, as of December 31.

However, Mr Beadle encouraged shareholders to sell.

Afterpay has raised more than $2 billion in capital since July, Mr Beadle said.

Investors continued to ignore how much capital was required to fund the company's growth, he said.

UBS said the shares were worth $30.

The Royal Bank of Canada's Sydney branch valued shares at $107.

Afterpay shares were in a trading halt due to the capital raising.

Despite the popularity of its service, the company is yet to make a profit. Its first half net loss after tax was $79.2 million.

Co-founders Anthony Eisen and Nicholas Molnar listed Afterpay on the ASX in 2017 and sold shares for $1 each.

The payments service provides credit to consumers and charges late fees, if applicable, rather than interest.

Young people have taken up the offer in droves in preference to credit cards.

However Afterpay makes most of its money by charging businesses a fee for each sale using its service.

Shares last traded at $134.36.

They fetched a record $160.05 earlier this year.

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