Buy now pay later provider DivideBuy has secured a £300 million lending facility as it continues its stellar growth trajectory. 

The Newcastle-under-Lyme business, a rival to Klarna, is on track to hit £175m gross merchandise value this year.

The funding from global investment management firm Davidson Kempner Capital Management LP, which includes a minority equity investment, will be used by the FinTech to hire executives, invest in its platform and boost its retailer network in the UK and internationally.

Founded in 2014, the firm’s tech is now used by more than 500 retailers, including Cloud Nine and Simba Sleep.

It recently announced a partnership with recommerce experts musicMagpie, creating a new rental platform for the listed retail giant.

“DivideBuy has one goal – to make buy now pay later transactions easy and accessible to retailers and customers,” said founder and CEO Rob Flowers. 

“The sheer scale of this investment underlines the strength of DivideBuy’s business model, and how we’re revolutionising the POS (point of sale) finance sector by owning the full lending journey with assistive technology, automated soft credit checks and transparent lending with no hidden fees.

“The flexibility of our technology treats each customer as an individual, and also gives retailers revenue-boosting strengths such as higher checkout conversions and higher basket sizes. 

“With this backing from Davidson Kempner, we can now make buy now pay later transactions available to even more retailers, and extend the alternate payment method to many more consumers who want greater payment choice at the POS. 

“We’re thrilled to embark on the next stage of our expansion and achieve our ambitious growth plans.”

Two years ago DivideBuy secured over £60m of equity investment and debt financing from Souter Investments and Jon Moulton’s private investment vehicle.

Unlike other POS finance solution providers, DivideBuy offers both the technology platform and the credit facility to the retailer. By cutting out traditional credit suppliers, DivideBuy says it enables retailers to lower their credit risk and accelerate customer onboarding with market-leading application approval rates.

After switching from competitors, DivideBuy says retailers experience vastly improved conversion rates, increased basket value, reduced basket abandonment and typically see an increase of up to 70% on approvals and conversions, which helps to foster customer loyalty.

Unlike other POS finance providers which offer instalment terms up to three months, DivideBuy enables customers to have instalment terms of up to 12 months, which helps consumers purchase larger-value items with affordable, interest free instalments, and helps retailers raise average basket values.  

Flowers added: “The partnerships we’ve secured with leading businesses like musicMagpie demonstrates how much our solution resonates with consumers looking for more flexible and affordable ways to pay.

“With the backing of Davidson Kempner, we have set ourselves the ambitious task of growing exponentially within the interest free market, while being true to our original aim of creating greater value for retailers everywhere and enhancing the entire buying, or indeed, renting, experience for customers by creating intuitive, user-driven platforms.”