NEO Finance IPO – the first Lithuanian fintech startup to enter the stock market

INITIAL INFORMATION ABOUT PROSPECTIVE INITIAL PUBLIC OFFERING

The document provides general information. This is not an offering to purchase securities. Any decision to invest in shares should be based on an information document that will be published at the inception of public offering.

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NEO Finance IPO – the first Lithuanian fintech startup to enter the stock market

Initial public offering (IPO) of AB NEO Finance, a Lithuanian fintech startup which administers the peer-to-peer lending platform Paskolų klubas, and provides the Neopay payment initiation service (PIS), will start on May 15th.

This is the first time when a Lithuanian fintech startup enters the stock market; following the IPO, shares of NEO Finance will be listed on the alternative First North market at Nasdaq Vilnius.

Three countries simultaneously

“We are growing rapidly, and we see even bigger opportunities to expand our peer-to-peer lending and payment initiation services further. We believe that the residents and investors in Lithuania, Estonia and the Netherlands will make use of this opportunity, and will contribute to our growth – in the Western countries, company shares represent a common way of investing one’s savings or accumulating funds for the future retirement”, says Evaldas Remeikis, Chairman of the Board of NEO Finance .The IPO, which will start at 10:00 a.m. on the 15th of May and will last until 11:59 p.m. of the 4th of June, will take place in three countries: Latvia, Estonia and the Netherlands, where the company has recently opened a subsidiary, NEO Finance B.V., for further expansion in Europe.

During the IPO, NEO Finance intends to raise EUR 0.5–2.5 M, which will be used for company expansion in Lithuania, thus increasing the consumer credit market share, as well as expansion of PIS, thus becoming the leader of the payment market in Lithuania, with the ultimate goal of offering this service in other European countries.  

Prospects are opening

“Peer-to-peer lending is becoming increasingly popular both in Lithuania and worldwide, due to attractive lending terms. For individuals, it represents an attractive and understandable way to employ their money and earn additionally, whereas the banks are offering zero interest for the deposits”, says Maurice Beckand Verwee, an experienced startup investor and member of the Supervisory board at NEO Finance, who has recently invested in the company himself.

According to him, particularly broad opportunities open for the payment initiation service in Europe, since the open banking provisions are to be introduced in the most recent Payment Services Directive of the European Union (PSD2), which is to come into force in September.  

“In simple terms, starting from Autumn, fintech companies will be able to compete on equal terms with banks in the provision of payment services. This is a great opportunity for the new providers of financial services to establish themselves in this market, and now is the time to prepare for this expansion”, Mr Verwee says.

Only the bottom of the price established

The Board of NEO Finance has set the minimum share price at Eur 3.14. However, each investor will be able to offer their own price at which they are willing to buy the selected number of shares when submitting their offers.

The larger the price and the earlier an offer is made, the greater the likelihood that the offer will be successful, seeing that the IPO will be carried out following the Dutch auction principle for the first time in Lithuania and the Baltics.

This means that only the minimum share sales price, or the bottom of offerings, is established, whereas the final price at which the shares will be sold is to be established by the investors. The final price of the share will be the same for all investors; those who offer a higher price, will be refunded the excess to their accounts.

The minimum price of the share has been established based on the crowdfunding campaign that took place last Autumn in the United Kingdom crowdfunding platform Seedrs. Then, NEO Finance raised Eur 210,000, and the investors paid Eur 3.14 for a share. At the time of the campaign, the company was valued at Eur 10.8 million.

Early registrations are possible

Offers can be made on the websites of NEO Finance (www.paskoluklubas.lt/ipo and www.neofinance.com/ipo) in a special section developed for the IPO, as well as via the finance intermediaries, namely financial brokerage companies or banks in any country. Law firm Sorainen was selected as the legal counsel for this IPO.  

Those willing to make an offer, first of all should register on the platform, and perform their identification. When making an offer, a securities account is also required. Eventually, the shares will be transferred to the securities account, if the offer is successful.

“Everybody who has already registered on www.paskoluklubas.lt or www.neofinance.com – both as investors or borrowers – will not be required to re-register. Thus, we are saving the time of our prospective shareholders, and enable them to prepare for participation in the IPO in advance”, says Mr Remeikis.

Lent and borrowed more

Over the first quarter of this year, NEO Finance administered the issue of Eur 4.5 million in loans in the P2P lending platform. This represents an increase of 50%, compared to the same period last year, when individuals borrowed Eur 2.99 million via Paskolų klubas, and an increase of 7% compared to the last quarter of 2018 (Eur 4.2 million).

In the first quarter of this year, consumer credits issued by NEO Finance accounted for 53% of the overall loan market of the P2P lending platforms in Lithuania. 

At the end of the first quarter, the portfolio of loans administered by NEO Finance amounted to Eur 20.3 million in total. Overall, to date, more than Eur 30 million in loans have been granted via NEO Finance.

Growth of payment initiation service

In the first quarter, the most rapid growth of the revenue for NEO Finance was recorded in the payment initiation service (PIS), which is provided under the brand of Neopay. During this period, the company initiated over 733,000 payments, and its revenue from this activity increased by 33%, compared to Q4 2018.

Since Spring 2018, when NEO Finance started providing PIS, over 1.5 million payments have been initiated via NEO Pay. At the moment, NEO Finance is providing PIS to as the following e-commerce websites: Tiketa, Edrauda and payment platforms Manogilė.lt and Vienasaskaita.lt.

For more information on NEO Finance, please refer to www.paskoluklubas.lt and www.neofinance.com. More about PIS: https://neopay.lt/.

In the picture (from the left): Board member of NEO Finance Marius Navickas, head of administration and Board member Aiva Remeikienė, Board member Deividas Tumas, Chairman of the Board Evaldas Remeikis and CFO Andrius Liukaitis

More information:

Evaldas Remeikis, Chairman of the Board of AB NEO Finance, email [email protected]

Maurice Beckand Verwee, member of the Board of Observers of AB NEO Finance, email [email protected]

Justinas Kodžius, head of marketing and communications at AB NEO Finance, email [email protected]

Rita Saunorytė Norutienė, Agency 1323, tel. +370 682 95377, email [email protected], www.1323.agency