Buy-now-pay-later service Zip Co. (ASX: Z1P) is looking to raise $60 million from a share issue to fund its UK expansion and move into small business lending.
The fintech announced the capital raise to the market this morning. $50 million will come from a non-underwritten placement to professional and sophisticated investors, with $10 million via a share purchase plan (SPP) to eligible shareholders, capped at a maximum of $27,000 per shareholder.
The offer price of $3.70 per share is a 5.6% discount on Thursday’s close of $3.92, and a 4.7% discount to the 10-day volume-weighted average price.
The company says the funds will go towards its global expansion into the UK, which it says is a $630 billion market, expand Zip’s product range, including the launch of Zip Biz, a BNPL solution for small business, increasing investment in product and technology and strengthen the balance sheet.
Zip shares are currently in a trading halt and will return to trade on Monday. The settlement of new shares in the institutional placement will occur next Wednesday, December 4. The SPP will get underway on Friday, December 6, closing two weeks later on Dec 20. If a scaleback is needed, it will be announced Dec 27. Settlement under the SPP is Dec 30.
Founded by Larry Diamond and Peter Gray in 2013 Zip listed on the ASX at $0.20¢ a share in 2015.
Zip Co’s share price was at a record high of $5.53 in early October before investment bank UBS placed a sell rating on Zip and rival Afterpay labelling them both overvalued. Both share prices plummeted, with Zip falling as low as $3.44 on November 6 before leaping above $4 the following day after announcing a deal with Amazon to offer BNPL services to customers on the e-commerce leviathan’s Australian site.