Cash Converters Raises $25M to Acquire 29 Franchise Stores and Expand Corporate Network
Cash Converters International Limited has launched a $25 million equity raising to fund the acquisition of 29 franchise stores, expanding its corporate footprint on Australia's East Coast. The move aligns with its growth strategy targeting disciplined franchise acquisitions in Australia and the UK.
- Proposed acquisition of 29 franchise stores forming Cash Converters Investment Group
- Equity raising of approximately A$25 million via placement and entitlement offer
- EZCORP commits to full subscription and sub-underwriting to maintain 43.65% ownership
- Acquisition expected to be earnings accretive and funded by cash reserves and equity proceeds
- Expansion increases corporate store network from 92 to 121 stores, primarily in Australia
Strategic Expansion Through Acquisition
Cash Converters International Limited (ASX – CCV) has announced a significant equity raising of approximately A$25 million to finance the proposed acquisition of 29 franchise stores that collectively form the Cash Converters Investment Group (CCIG). This acquisition will expand Cash Converters’ corporate store network from 92 to 121 stores, predominantly across Queensland, New South Wales, the Australian Capital Territory, and Tasmania.
The acquisition aligns with Cash Converters’ broader growth strategy, which targets over 20 franchise store acquisitions annually in Australia and the United Kingdom. By converting these franchise stores into corporate-owned outlets, the company aims to enhance operational consistency, improve compliance, and unlock synergies between retail and lending operations.
Details of the Equity Raising
The equity raising comprises a fully underwritten placement to sophisticated and professional investors raising around A$5 million, and a 1-for-9.57 pro-rata accelerated non-renounceable entitlement offer to eligible shareholders aiming to raise approximately A$20 million. The offer price is set at $0.305 per new share, representing an 11.54% discount to the theoretical ex-rights price and a 12.86% discount to the last closing price.
EZCORP, the company’s major shareholder holding 43.65% of shares, has committed to fully subscribe for its entitlement and sub-underwrite the retail entitlement offer to maintain its ownership stake. The equity raising shares will represent about 13.06% of the current shares on issue post-raising.
Financial Impact and Outlook
Cash Converters reported strong financial results for FY25, with operating NPAT up 20% to $25.1 million and earnings per share increasing by 41% to 3.9 cents. The acquisition is forecast to be accretive to earnings per share from the first full year post-completion, with an internal rate of return exceeding 15% and an EBITDA multiple of 4.5x based on CCIG’s FY25 results.
The company plans to fund the acquisition through a combination of existing cash reserves and proceeds from the equity raising. The expanded corporate network is expected to drive margin expansion through improved buying power, standardized systems, and enhanced retail and lending integration.
Risks and Considerations
While the acquisition and equity raising are strategically aligned, several risks remain. Completion of the acquisition is subject to conditions precedent, including due diligence, landlord consents, employee transfers, and board approval. The financial information for CCIG is unaudited and provided by vendors, which introduces some uncertainty.
Additional risks include potential dilution for existing shareholders, regulatory compliance challenges in multiple jurisdictions, integration risks of the new stores, and the possibility of changes in market conditions affecting performance. The underwriting agreement with Bell Potter Securities is critical to the success of the equity raising, and any termination could impact funding availability.
Next Steps and Timeline
The equity raising timetable is set between late October and mid-November 2025, with the proposed acquisition targeted for completion by early December 2025. Eligible retail shareholders will receive detailed offer documentation and have the opportunity to participate in the entitlement offer.
Investors and market watchers will be keen to monitor the progress of the equity raising, the finalization of acquisition conditions, and the integration of the franchise stores into Cash Converters’ corporate network.
Bottom Line?
Cash Converters’ $25 million equity raise to acquire 29 franchise stores marks a pivotal step in its growth strategy, but successful integration and regulatory navigation will be key to unlocking value.
Questions in the middle?
- Will the acquisition of CCIG complete on schedule given the conditions precedent?
- How will Cash Converters manage integration risks and realize expected synergies from the new stores?
- What impact might the equity raising and acquisition have on share price volatility and shareholder dilution?
