Spenda ASX SPX e-commerce payments Capricorn Society
October 17, 2023
Spenda signs 10yr e-commerce payments deal with Capricorn Society

Payments technology provider Spenda (ASX: SPX) has signed a 10-year deal with automotive organisation Capricorn Society for the provision of software and ecommerce payments services.

The agreement will be subject to the successful completion of a digital services delivery (DSD) initiative between the companies.

Spenda stands to receive $443,000 following completion of the initiative’s final phase, plus $1.3 million in development fees for a commercial launch in the new year and minimum recurring revenue of $100,000 per month in software licensing fees.

The parties have agreed to a 5+5 year options to extend the agreement to a 20-year term.

Transformational opportunity

Spenda’s chief executive officer Adrian Floate said the deal represented a “transformational commercial opportunity”.

“Over the past five months, we have been working closely with the Capricorn team to deliver a payments solution to enable all members to access e-commerce payments powered by Spenda,” he said.

“We are now in the final phase of the foundation stage of the DSD project and on track for commercial launch in early 2024.”

Infrastructure upgrade

The DSD initiative is designed to upgrade Capricorn’s payments infrastructure with a view to increasing productivity and creating efficiencies for members and preferred suppliers.

The upgrade will incorporate Spenda’s Pay-Statement-by-Link to enable members to view live statements and integrate purchases into their financials and allow preferred suppliers to process credits.

A payments widget will also be included to allow member purchases to be charged to Capricorn’s trade account via preferred supplier e-commerce solutions.

Preferred supplier

In May, Spenda announced that it had been selected as Capricorn’s preferred supplier to deliver the first phase of the DSD initiative (foundation stage) over a 12-week period.

The initial project works were completed in August and negotiations took place to extend the foundational phase engagement.

The companies have now entered into a two month contract for Spenda to complete the final phase of the DSD initiative, which involves security and platform proof-of-concept which will simulate the entire production solution including the creation of a mock supplier e-commerce site.

The proof-of-concept is expected to de-risk solution implementation and provide the parties with final design insights before the build phase commences.

Cornerstone investment

Spenda confirmed that Capricorn would have the opportunity to stage a $7.2 million cornerstone investment separate to the licencing agreement.

Under the terms, Capricorn would be able to subscribe for up to 412 million Spenda shares at $0.0175 each, representing a 77% premium to the 30-day volume weighted average price of $0.0099.

The funds would be used for product development, to strengthen Spenda’s balance sheet and for working capital to scale, and is subject to successful completion of the DSD foundation stage.

Following completion of the placement, Capricorn would be a substantial shareholder of the company with up to 9.97% equity.

Capricorn Society

Capricorn is a member-based organisation established in 1974 to support businesses in the automotive industry.

Its current network consists of over 26,000 members and more than 2000 preferred suppliers across Australia and New Zealand.

Capricorn members purchase approximately $270 million in parts per month from the approved supplier network.

Agricultural deal

Earlier this week, Spenda announced it had reached agreement with AgriChain to offer its early payment services to grain growers.

AgriChain provides an enterprise resource planning (ERP) system which connects buyers and sellers in the agricultural supply chain.

The network consists of approximately 10,000 traders (including brewers, flour millers, animal feed manufacturers and other grain users), producers, manufacturers, retailers, farmers and grain storers.

Under the agreement, Spenda will provide an early payment program to AgriChain’s customers through the provision of card-blended trade finance delivered through its payment widget and integrated into the AgriChain solution.

Debt warehouse structure

Mr Floate said it would be used in parallel to Spenda’s current debt warehouse structure without the need for first loss capital or credit enhancement.

“This 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,” he said.

“It highlights the versatility and application of our payments solutions to new verticals, from franchise groups and online market places to cross-border trade and now agricultural trading networks.”

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