Key points are that NAB is partnering with Plenti which may:

• feed Plenti revenue
• help with social proof for plenti
• there is also an equity component which suggests a higher SP but is not completely straight forward and needs careful reading

the market likes it!

should have said hold IRL

Plenti Group Limited ABN 11 643 435 492

28 NOVEMBER 2023 ASX RELEASE

Plenti and NAB announce strategic partnership

Plenti Group Limited (Plenti) and National Australia Bank Limited (NAB) today announce a

strategic partnership, initially launching a “NAB powered by Plenti” car and electric vehicle (EV)

loan and then making Plenti renewable energy finance available to NAB customers. The parties

have also entered into an equity investment agreement under which NAB may acquire up to

15% of Plenti’s share capital through placements and market purchases, reflecting the

importance of the strategic partnership to both Plenti and NAB.

Highlights

• Plenti and NAB have entered into a strategic partnership under which Plenti will provide

“NAB powered by Plenti” and Plenti own-branded finance solutions to NAB’s large

personal banking customer base

• The strategic partnership combines NAB’s trusted brand and deep customer

relationships with Plenti’s award-winning consumer finance experiences, efficiency and

technology

• The strategic partnership broadens the consumer finance offerings available to NAB’s

customers, whilst increasing and diversifying the revenue streams of both Plenti and NAB

• An innovative “NAB powered by Plenti” car and EV loan is expected to be launched in the

first half of 2024, through which Plenti and NAB aim to deliver a leading car finance

experience

• Select Plenti household renewable energy finance solutions are expected to be made

available to NAB’s customers in 2024, which aims to help Australian households save on

energy bills and reduce carbon emissions

• Plenti and NAB have additionally entered an equity investment agreement, which

provides for NAB to acquire or subscribe for up to 15% of Plenti’s share capital, based on

the achievement of certain milestones

Daniel Foggo, Plenti’s Founder and Chief Executive Officer, said:

“This strategic partnership makes sense – it brings together one of Australia’s largest and

most trusted financial institutions with one of Australia’s most innovative and awarded

financial technology companies.”

“Together we see an opportunity to better serve new and existing customers with car and

renewable energy lending products and we’re excited about the potential for future

expansion of the strategic partnership over time.”

“This strategic partnership is expected to have a meaningfully positive impact on Plenti’s

growth and profitability in future years.”

Paul Riley, Executive, Personal Everyday Banking at NAB said:

“We’re excited to launch our first products with Plenti next year and we look forward to

working with Plenti to explore ways to expand the strategic partnership further.

”

“The use of electric vehicles and environmentally sustainable products in the household

is becoming more common in Australian homes and we’re keen to support our customers

transition to a low emissions future.

”

“NAB powered by Plenti” car and EV loan

In the first stage of the strategic partnership Plenti and NAB will launch a “NAB powered by

Plenti” car and EV loan for which:

• NAB is responsible for marketing and promoting the co-branded car and EV loan product

to customers drawing on its large personal banking customer base

• Plenti is responsible for the provision of loan application experiences, credit assessment,

loan settlement, and on-going loan and customer management

• Plenti and NAB will design and develop product features and technology integrations to

streamline customer experiences and facilitate on-going customer and corporate

reporting

• Loans will be funded by NAB as product issuer and held on NAB’s balance sheet, with

credit risk borne by NAB. NAB’s credit and relevant policy settings will apply

• The key financial provisions include Plenti receiving:

- An upfront payment for the establishment of technology, infrastructure and

operational set up for the delivery of the relevant services

- An upfront fee per loan funded (establishment fee), which steps down once the loan

book reaches $1 billion. Plenti will be guaranteed a minimum value of establishment

fees per month until the total fees received reach a threshold amount

- A monthly servicer fee calculated as a percentage of the loan book, which scales

down as the loan book grows until the loan book reaches $3 billion

• The agreement has an initial term of 5 years with the ability to extend for a further 5 years

with the agreement of both Plenti and NAB

The economics for Plenti will depend on the level of originations and loan book achieved over

time. Indicatively, annual revenue for Plenti in a year with originations of $500 million and an

average loan book of $1 billion would be approximately $20 million. The timeframe to reach this

indicative annual revenue will depend on several factors including the appeal of the car loan

offering to NAB’s customer base and the success of NAB’s marketing and promotional activities.

The minimum annual revenue to be received by Plenti under the strategic partnership is $3

million.

The “NAB powered by Plenti” car and EV loan is a direct-to-consumer offering and is not

expected to impact Plenti’s existing car loan distribution via mortgage and asset finance

brokers, nor other third-party channels.

Household renewable energy finance referrals

Plenti and NAB are to develop a referral program to assist NAB’s customers finance the

purchase of eligible renewable energy systems, whereby:

• NAB to advertise select renewable energy finance products offered by Plenti to its

customer base and refer customers to Plenti

• Plenti to provide NAB’s referred customers with access to selected Plenti installer

partners to solicit quotes for the installation and financing of eligible renewable energy

systems, including via its GreenConnect platform

• Plenti will be responsible for the provision of loan application experiences, credit

underwriting, loan funding and settlement, and on-going loan and customer

management

• Plenti to pay NAB a referral fee for each funded loan under the arrangements

• The arrangement has an initial term of 5 years and the ability to extend for a further 5

years with the agreement of both Plenti and NAB

Economics for Plenti on the renewable energy product are expected to be substantially similar

to Plenti’s existing renewable energy offering.

Collaboration across additional activities

Plenti and NAB will explore opportunities for the continued expansion of products offered under

this strategic partnership over time.

Equity investment agreement terms

Plenti and NAB have entered an equity investment agreement, which provides for NAB to

acquire up to a 15% equity interest in Plenti via subscribing for Plenti shares and/or through

market purchases. The key terms of this agreement are summarised below:

• NAB may make market purchases of up to 5% of Plenti’s share capital from the date of this

announcement to 18 months following launch of the “NAB powered by Plenti” car and EV

loan (Market Purchase)

• NAB may subscribe (and correspondingly Plenti must make a placement to NAB) for 5% of

Plenti’s share capital, exercisable within 2 months of the “NAB powered by Plenti” car and

EV loan launch, at a price per share which is the lower of:

- $0.90, and

- a 25% premium to Plenti’s 1-month share price VWAP prior to the issuance of a

subscription notice, subject to a floor price per share of $0.75 (Placement 1)

• NAB may subscribe (and correspondingly Plenti must make a placement to NAB) for a

further 5% of Plenti’s share capital, at a price per share which is the higher of:

- $1.20, and

- a 25% discount to Plenti’s 1-month share price VWAP prior to the issuance of a

subscription notice,

exercisable within 18 months of the co-branded car loan launch and subject to the loan

portfolio reaching $500 million (Placement 2)

Additional terms in relation to NAB acquiring an equity interest in Plenti include:

• If the $500 million loan portfolio is reached within 18 months of the co-branded car loan

launch, and NAB does not subscribe for shares under Placement 2, it may instead purchase

up to an additional 5% of Plenti’s share capital via market purchases within 12 months of the

expiry of Placement 2 exercise period

Standstill

NAB and Plenti have also entered equity ‘standstill’ arrangements, which limit NAB’s ability to

acquire or subscribe for Plenti shares, outside of the arrangements set out above. These

standstill arrangements apply if NAB has acquired above 5% of Plenti’s share capital via market

purchases and expire on the earlier of 5 years after entry into the commercial arrangements for

the car and EV loan product or 6 months following the termination of those arrangements.

These ‘standstill’ arrangements will also cease to apply in certain circumstances, including with

Plenti Board consent, where Plenti’s share price is greater than $2.00, if there are certain

changes to substantial holders / holdings in Plenti (including where a competing financial

institution acquires a shareholding of 5% or more) or if a credible third party has made an offer

in relation to a change of control event. Notwithstanding the above restrictions, certain

transactions are permitted, including where NAB has acquired shares in its capacity as

custodian in its normal course of business, participation in a pro rata issuance and to facilitate

the disposal of shares.

Change of control transaction

NAB’s right to subscribe for Placement 2 shares will expire in circumstances where Plenti is

delisted due to a control transaction. Under the strategic partnership a fee may also be payable

from Plenti to NAB should NAB terminate the relationship as a result of a change of control of

Plenti.

To the extent a control transaction requires a shareholder vote and occurs in the initial 5 year

term of the commercial agreement and while NAB’s partnership auto loans are below $2 billion

in balances, then NAB has agreed to abstain from voting any relevant interest in shares it holds

above 10.01% with respect to certain shares acquired in accordance with the equity investment

agreement if NAB would not be voting in accordance with the recommendation of the Plenti

Board (noting that this requirement only applies up to a maximum of 4.99% voting power).

Additional terms

In respect of both the car and EV loan and renewable energy loan referral contracts, there are

performance review conditions (after 2 and 3 years for the car and EV loan arrangement, and

after 2 years for the renewable energy loan referral arrangement), service level requirements

and customary termination rights in the event of, among other matters, a material breach by

either NAB or Plenti. In the event the car and EV loan commercial arrangement is terminated,

and NAB takes over management of the underlying loans, trail fees are paid to Plenti, with the

quantum dependent on the circumstances of termination.

Further information

This release was approved by the Plenti Board of Directors.

For more information please contact:

Daniel Foggo

Chief Executive Officer

[email protected]

Miles Drury

Chief Financial Officer

[email protected]

About Plenti

Plenti is a fintech lender. We provide faster, fairer loans by leveraging our smart technology.

We offer award-winning car, renewable energy and personal loans, delivered by our proprietary technology, to help

creditworthy borrowers bring their big ideas to life.

Since our establishment in 2014, our loan originations have grown consistently, supported by diversified loan

products, distribution channels and funding, and underpinned by our exceptional credit performance and continual

innovation.

For more information visit Plenti.com.au/shareholders.

 loan originations up 30% compared with pcp and guiding for ‘robust growth’ in full year NPAT.

I don’t understand why the hedging costs are going to affect the first half FY24 but not the second but I’m naively pleased to see them growing and guiding towards increased NPAT.

I note bad debt hasn’t exploded… yet…

18 JULY 2023

ASX RELEASE

Plenti achieves record loan originations

Plenti Group Limited (Plenti) provides this trading update for the quarter ended 30 June 2023 (1Q24).

Highlights

• Loan portfolio increased to $1.90 billion, 32% above PCP and 8% above prior quarter

• Automotive loan book reached $1 billion milestone

• Record quarterly loan originations of $332 million, 15% above PCP and 20% above prior quarter, driven by record renewable energy and record personal lending, combined with a strong recovery in automotive loan originations

• Annualised net credit losses of 117 basis points and 90+ day arrears of 49 basis points at quarter end, reflecting the credit strength of Plenti’s loan portfolio

• Completed $406 million automotive asset-backed securities (ABS) transaction in June 2023, priced attractively relative to comparable ABS transactions, reflecting strong support from a broad range of investors

• Quarterly revenue of $46 million, 51% above PCP

 Loan portfolio ($bn)

 2.00 1.75 1.50 1.25 1.00 0.75

0.51 0.50

0.25 0.00

1.90 1.77

 0.92

59% 2-year CAGR

1.30 1.11

1.67

1.55 1.44

 Dec 2020

0.62

Mar 2021

0.76

Jun 2021

Sept 2021

Dec 2021

Mar 2022

Jun 2022

Sept 2022

Dec 2022

Mar 2023

Jun 2023

Commenting on the quarter, Daniel Foggo, Plenti’s Chief Executive Officer, said:

“We’re delighted to have delivered record quarterly loan originations, as our priority moving into the new year has been to drive strong origination growth to help us maximise the economies of scale our technology-led model offers.

Plenti Group Limited ABN 11 643 435 492

“We achieved record monthly lending of over $130m in June 2023 and we expect our differentiated customer experiences to continue to attract healthy levels of demand across each of our three core lending verticals.”

Loan portfolio growth

Loan portfolio ($m) 30 June 22

Automotive 838 Renewable energy 151 Personal 451 Total 1,441

30 June 23 Growth

1,079 29% 218 44% 607 35%

1,904 32%

          Plenti’s loan portfolio, which is a key driver of revenue, increased to $1.90 billion at 30 June 2023, a 32% increase from 30 June 2022 ($1.44 billion) and an 8% increase from 31 March 2023 ($1.77 billion). The automotive loan book reached the milestone of $1 billion in April 2023.

Loan originations and margins

Loan originations for the quarter totalled $332 million, 15% above the prior comparable period (PCP) and 20% above

prior quarter.

Automotive loan originations were $174 million, 37% above prior quarter, reflecting the continued adoption of Plenti’s commercial loan offering as well as the benefits of a seasonally strong June. Renewable energy loan originations were $36 million, slightly above the prior quarter but 53% above PCP. Personal loan originations were $122 million, 8% above the prior quarter, supported by the continued growth in Plenti’s direct to consumer lending.

Net interest margins on new loan originations were negatively impacted in the last 6 weeks of the quarter by higher interest rate hedging costs, due to the significant increase in market interest rate expectations and a corresponding increase in the yield curve. The increase in funding costs has now been largely passed through to average borrower rates.

Credit performance

Annualised net losses for the quarter were 117 basis points, reflecting increasing overall industry loss rates but also the relative credit strength of Plenti’s loan portfolio.

90+ day arrears were 49 basis points at the end of the quarter, up from 42 basis points at the end of the prior quarter. Early-stage arrears have been relatively stable since February 2023, assisted by continual refinement of Plenti’s credit risk appetite and settings.

The loan portfolio weighted average Equifax credit score remained high at 830 at the end of the quarter, versus 831 at the end of the prior quarter.

Funding

Plenti completed a $406 million automotive loan ABS transaction in June 2023, which increased its total ABS issuance to over $1.7 billion and refreshed capacity in its automotive warehouse facilities. Plenti’s regular ABS issuance and the credit strength of its underlying receivables supported strong demand from both domestic and international investors.

Plenti continued to provide investors on its retail investor platform, the Plenti Lending Platform, with an ability to invest in notes issued as part of its ABS transactions via the recently launched ‘Notes Market’. As well as providing investors on the Plenti Lending Platform with access to higher investment returns and providing further diversity to

Plenti’s ABS funding, the Notes Market has continued to release corporate capital, which has been invested to support growth in other funding structures.

Outlook

Plenti’s FY24 priorities and objectives as set out in its results presentation released in May 2023 were as follows:

Priority

Growth

Profitability Efficiency

FY24 objective

- Drive solid growth in loan originations and loan portfolio

- Grow revenue to over $200 million

- Deliver robust full year Cash NPAT growth, skewed towards 2H24

- Reduce cost-to-income ratio to <30%

- Remain on target to deliver $25m in efficiencies as loan portfolio scales towards $3 billion

    Plenti is on track to achieve its FY24 objectives, although the increase in interest rate hedging costs experienced in the second half of the quarter will impact profitability. Cash NPAT is now expected to be around break even in 1H24. Plenti continues to expect robust growth in full year Cash NPAT, from the $4.5m achieved in FY23.

Further information

All numbers in this release are preliminary and unaudited. This release was approved by the Chief Executive Officer on behalf of the Plenti board of directors.

For more information please contact:

About Plenti

Plenti is a fintech lender. We provide faster, fairer loans by leveraging our smart technology.

We offer award-winning automotive, renewable energy and personal loans, delivered by our proprietary technology, to help creditworthy borrowers bring their big ideas to life.

Since our establishment in 2014, our loan originations have grown consistently, supported by diversified loan products, distribution channels and funding, and underpinned by our exceptional credit performance and continual innovation.

For more information visit plenti.com.au/shareholders.

 Daniel Foggo

Chief Executive Officer [email protected]

Miles Drury

Chief Financial Officer [email protected]

https://www.afr.com/companies/financial-services/brokers-say-plenti-s-profit-will-jump-in-2024-despite-higher-rates-20230528-p5dbub

So I think this business is outside of my circle of competence given that I have a rudimentary understanding of financial services businesses.

I heard the founders on a podcast (equity mates) years ago and was impressed from a qualitative perspective with their approach to leadership and their humble take.

Im now looking at their top line growth and their growth in NPAT and they appear to be on a PE of ~20 with hockey stick growth.

I know I’m missing something and I’d like strawpeope to tell me what it is…

Put in a small amount of money at the high end in the Flex Market (4.9% v 4.5%) a couple of days ago.

Didn't wait too long for the funds to get matched to a borrower.

People still feeling the pain.

Don't hold shares but do use Plenti to lend some money in the market.

Ewan McGregor and Charley Boorman have featured in some epic ride adventures the most recent of which was Long Way Up from Ushuaia in Argentina through Latin America to Los Angeles. They did it on Harley Davidson then in pre-release, electric Livewire. They were also supported by pre-production Rivian. If you are into that kind of thing, it’s worth watching.

Why am I reading this I hear you ask? Well, Rivian just listed. Three years ago, the company lost a few hundred million, last year around a billion, and in the first 9 months of this year…another billion. The company has built/ sold a hundred something Rivian electric “adventure vehicles” and in the first few days following listing the shares are up over 70%.

On the other hand, Plenti released their results today which looked decent to me. All the numbers are still heading the right direction. Loan book continues to grow, defaults continue to decline, costs while they have increased are under control and in alignment with the business objectives. The target to NPAT remains on track.

The market thoughts. Better mark them down 4% 

Loan book in March ’21 was 1.26B and they have set a target of a 5B book by 2025. I think they can do it. Automotive is a decent chunk of the business – all they need is Rivian launch in Australia and see a preferred vehicle finance partner...

It is always pleasing to see the numbers heading the right direction and Plenti has put out another record quarter. This has also achieved the goal of $1B loan book target a quarter earlier than anticipated, by December this year. Plenti also expects to be cash flow positive by year end.

The growing load book was on the back of an all-time monthly of $95.5 million in loans in September, an increase of 159% on the same month in 2020. 

Loan growth has not surprisingly been in automotive, the highest book value, where everyone has been buying cars, as well as in personal loans and renewables.

Despite renewables being the smallest portion of loans, this sector is also seeing strong growth in the book.

Automotive funding costs have been lowered after Plenti completed a $306.3 million asset based securities transaction in August.

We are all, always, looking for investment returns. If not, what are we doing here? Point of this little anecdote is I have invested via Pleni since 2016, or RateSetter as they were originally called, as a peer to peer lender.

With all lending there are risks. In my peer to peer journey there have been precisely none, with all loans repaid in full, and even better average returns have been above 6%. This was at the conservative end of my portfolio and compared to something like real estate rental returns, that number is excellent.

As a peer to peer lender, they gave you the opportunity to participate in the IPO in September 2020. As I understood the business reasonably well, and the IPO opened the financials, I put a decent sum into it. It promptly plummeted.

This is a lesson about staying headfast and trusting your thesis. I should have added them to my Strawman portfolio where they would still be a hold for me. 

Plenti delivers another record quarter

Highlights:

? Record loan originations of $130.9 million, 58% above prior corresponding period and 22% above prior quarter

? Total loan portfolio increased to $508 million, 46% above prior corresponding period

? Three further record loan origination months, during which $1 billion in cumulative lending and >$500m loan portfolio milestones were achieved, both ‘firsts’ for an Australian FinTech consumer lender

? Funding headroom increased materially through automotive loan warehouse facility upsize and introduction of new $100 million renewable energy and personal loan warehouse facility

? Loan portfolio continues to demonstrate strong credit performance, with low levels of losses and 90+ day arrears declining to 0.32%

? Well positioned to maintain growth across key lending verticals