Australian media giant Seven West Media (ASX: SWM) will take a strategic investment of 6.6 per cent in financial services platform Raiz (ASX: RZI) for $10 million to accelerate the company's growth.
Sydney-based Raiz, which operates a platform whereby users can invest spare change from everyday purchases into a diversified portfolio of shares and other assets, says it will work with Seven to utilise its extensive media reach for an advertising campaign to bolster the growth of the fintech in the Australian market.
As such, Raiz said it will allow the company to “scale up in the next 12 to 24 months in a way that would not be possible without the same advertising spend”.
Payment for the $10 million investment will be split between $2 million in cash and the equivalent of $8 million in advertising across Seven’s broadcast television, publishing and digital media assets.
“This investment by Seven into the Raiz business is a strong endorsement of Raiz’s business model and management’s ability to execute. After extensive discussions with Seven, we have concluded that its media assets and reach are an excellent means to promote Raiz’s products and services to achieve the accelerated growth we require,” Raiz joint group CEO Brendan Malone said.
“Since launching nearly six years ago, we have largely grown organically and by using paid social media to acquire customers. Our cost of acquisition for customers (CAC) has been, on average, less than $12 for a paying Raiz customer, an industry-beating CAC. We have helped more than 500,000 young Australians save and invest over this journey.
“With Seven we will be able to re-engage with many of these customers as well as expand our reach to a fresh audience and explain why Raiz is an excellent product for them for saving and investing in and outside of superannuation, even if they have broking accounts or high interest saving accounts with other organisations. We are not an either-or product.”
SWM managing director and CEO James Warburton described Raiz as a “disruptive digital player that is targeting a huge market opportunity”.
“Combining Raiz’s consumer offering, which has widespread appeal, with SWM’s scale and audience reach provides a significant opportunity to grow the business and is a strong fit with the strategy of our Seven West Ventures group,” Warburton said.
Shares in Raiz are up 6.92 per cent to $1.70 per share at 10.30am AEDT.
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