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It's payday: Afterpay set to be one of Australia's top 20 companies

Business

Buy now, pay later app Afterpay’s continued growth has helped it join the ASX 20, with investors paying a record price for its shares, all before the company has made a cent in profit.

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Afterpay’s phenomenal growth shows no sign of slowing as the payments provider shifts into rare company as one of the biggest 20 firms on the Australian sharemarket next week.

The payments provider will join the ASX 20 from December 21 after S&P Dow Jones Indices, which provides the index system for the Australian share market, revealed results of its quarterly review.

Afterpay, valued at $28.7 billion, will replace Insurance Australia Group, owner of brands such as CGU, SGIO and NRMA. IAG is worth $12.3 billion.

Co-founders Anthony Eisen and Nicholas Molnar listed Afterpay on the ASX in 2017 and sold shares for $1 each.

On Monday, the shares fetched a record price of $107.53, having gained more than 262 per cent since January 1.

The payments service provides credit to consumers and charges late fees, if applicable, rather than interest. Young people have taken up the offer in droves in preference to credit cards.

Yet the company is still to record a profit.

The Melbourne-based software vendor is not the only technology company growing considerably.

Xero, which provides accounting software, joins the ASX 50 on the same December date.

In a possible sign of how the pandemic has changed spending behaviour, Afterpay and Xero will dislodge Oil Search and shopping centres group Vicinity Centres from the top 50.

The buy now, pay later trend has attracted a raft of competitors. Humm, Laybuy, Openpay and Zip Co are among the companies offering similar services.

Afterpay shares had gained 6.45 per cent to $107.53 at 1435 AEDT on Monday.

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