Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank by assets, has bought a 5-per cent stake in Afterpay, an Australian fintech firm that offers buy-now-pay-later scheme, according to a disclosure.
Financial details of the acquisition, which involved 13.9 million ordinary shares, were not disclosed but Afterpay’s share jumped to a record A$82 ($59) apiece following the announcement.
The acquisition followed Tencent’s purchase of a 5 per cent stake in Afterpay for about A$390 million ($252 million) in May.
Based in Melbourne, Afterpay allows customers to purchase goods through interest-free instalments, a trend that has gained popularity with millennials.
A customer who misses a payment is charged a A$10 fee and won’t be able to use Afterpay until the payments are up-to-date, the company said.
“Afterpay is deeply committed to responsible spending and is always free for customers who pay on time,” Afterpay said on its website.
In financial 2018, late fees made up 24 per cent of the company’s income, but this fell to 18.7 per cent in 2019.
The company noted how payment preferences have shifted among generations, with credit card ownership among millennials 37 per cent lower than older generations.
“That’s why at Afterpay, we’re turning the credit industry on its head by putting our trust in the customers and giving shoppers the freedom to buy what they want today and pay over time,” the firm added.
Founded in 2015, Afterpay listed on the Australian Securities Exchange in 2016 and expanded into the United States in 2018. It works with a number of global brands, including Urban Outfitters, Anthropologie, Free People, Asos, and Aveda.
Japan’s Mitsubishi UFJ Financial Group has been on the lookout for opportunities in the financial technology space. In Southeast Asia, the firm has allocated $185 million to a CVC fund to invest in the region’s fintech startups.
MUFG did not state how many investments the fund plans to make in the region but noted that it is scouting for fintech startups that are looking to enter Japan.