Before it embarks on any listing the Germany-based company wants to grow its business but hopes to begin preparatory work on an exit once it is closer to being profitable, which could happen in the next two years, she said, adding that no advisors have been selected yet and mandates would come only when the opportunity is closer.

If an IPO does not materialise, the company could also consider a sale to a bigger player in the telecommunications market, to PEs or corporates with similar business models, she said.

In the meantime, the company is open to M&A and actively watching the market, she said.

Targets would have to either extend the company’s capabilities across the value chain at the front, including devices setup and mobile device management, which are supplied by business partners; or at the end of the value chain, specialising in refurbishment and reselling, she said.

This could also be set up internally and insourced, once a certain number of returning devices is reached, she added.

Targets would be smaller entities and could provide an entry point to other countries across Europe, for instance through warehousing and complementary capabilities across the mobile phone market, she said.

It closed a Series C extension round, raising USD 32m in August 2022, according to a press release.

In December 2021, the company closed a USD 200m debt and equity financing package consisting of a USD 65m Series C round plus a USD 135m debt package, according to reports.

Investors include Apollo Capital, Deutsche Telekom Capital Partners and Cadence Growth Capital, the CFO said.

SPV established for balance sheet relief

The company has also established a legal framework for asset-based financing to help sustain growth but also to alleviate balance sheet risks.

This has involved establishing a special purpose vehicle (SPV) into which it has funneled several of its loans, which is then financed by lenders.

This allows lenders to calculate a risk adjusted interest rate based on the pool of assets in the SPV rather than the whole company balance sheet, thus separating the risk of the loan pool from the parent.

The method is common among asset financiers, including in the German automotive sector where car loans are packaged into SPVs, the CFO said; German car loans are then often securitized in an asset-backed-securities ABS transaction.

The lenders on the SPV deal are Deutsche Bank and Phoenix, she said.

The company is on the lookout for new lenders and is testing the market to see which banks or institutions could be offering additional debt financing and at which conditions, she said, in light of rising interest rates.

An option for this could be finding new lenders to fund the same SVP or an additional lender taking part in a new structure comprising two SVPs, she noted, adding that funding would also come in different currencies as a hedging strategy given the company is serving customers in Europe, the UK and the US.

Securitisation is also an option, the CFO noted, adding though that it is only efficient with a certain volume of loans- usually, EUR 500m upwards for a capital market securitisation.

Everphone therefore is unlikely to tap the ABS market in its next debt deal but is likely to issue its first securitization after that, she said.

Asset-backed financing is cheaper than raising equity, where investors normally expect returns of around 15%, she said, adding that in recent years equity financing has become more difficult.

Any new equity financing will help the company achieve profitability within the next two years, depending on the business performance and newly acquired customers, she said.

However, Everphone is not looking for more equity over the next 18 months, she added, though specific factors coming into play might dictate a new need for such fundraising, for instance ahead of large customer rollouts or M&A activities.