Trade Me takes 16% stake in Sharesies for $4M
By Paul McBeth
Sept. 3 (BusinessDesk) - Trade Me paid $4 million to become the biggest shareholder in start-up fund distribution platform Sharesies, which it sees as opening up "big revenue pools".
The Wellington-based company announced the "small investment" in its annual result last month, saying the size of the investment was "commercially sensitive and not material". Documents lodged with the Companies Office dated Aug. 24 show Trade Me paid $14.11 a share to build a 16 percent stake in Sharesies, valuing the firm at $24.4 million.
"We think making investing more consumer-friendly can do great things for New Zealand consumers while opening up big revenue pools," Trade Me said in its annual report. "This is also another step in us building out a vibrant New Zealand online ecosystem."
Trade Me's Sharesies stake is one of four 'innovation' initiatives singled out in the annual report. The others include the company's new payment system Ping, experiments with artificial intelligence to accelerate the listing process, and a new-look mobile interface. Trade Me spent $28.7 million on investment activities in the year ended June 30, of which $24.7 million was the purchase and capitalisation of intangibles, including internal software development.
The online auction site has previously invested in other financial service platforms, such as its 13 percent stake in peer-to-peer lender Harmoney Corp.
Sharesies came out of the Kiwibank-sponsored 2017 fintech accelerator, providing an online platform for people to make regular small investments in a range of funds. It launched in June last year and as at July 31 had signed 20,000 customers and facilitated $21 million of investments.
The start-up doesn't charge on portfolios of $50 or less. Portfolios between $50 and $3,000 attract a $1.50 monthly charge and those over $3,000 have a $3 monthly fee. Investors can access 13 funds offered by AMP Capital, Pathfinder Asset Management and NZX's Smartshares exchange-traded funds.
NZX named Sharesies as a "channel innovator" in supporting the stock market operator's efforts to expand its ETF suite of products last year. NZX and Sharesies commissioned retail investor research by Colmar Brunton which found just 18 percent of New Zealanders own shares, with the biggest reasons being a lack of surplus cash, a lack of knowledge in how to invest, a belief that shares are a risky asset, and a belief that the share market is only for wealthy people.