Zip Co. (ASX: Z1P) has raised another A$400 million via a seven-year unsecured convertible notes to fund its international expansion plans.
The not-yet profitable BNPL’s latest raise follows a similar $1.5 billion raise by Afterpay (ASX: APT) via convertible notes due in 2026.
Co-founder and COO Peter Gray said they were “very pleased with the strong global demand for this offering”.
“This transaction further diversifies Zip’s sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders,” he said.
The initial conversion price of the Notes is A$12.39 per Ordinary Share, a conversion premium of 35% over the Reference Share Price.
Zip is also making a delta placement of around 11 million shares for hedging activity in relation to the Notes. The clearing price of A$9.18, a discount of 4.5% to April 14’s closing price. Those shares are being marketed to eligible investors and the notes are set to be listed on the Singapore Securities Trading exchange, with settlement expected around April 23.
As part of the placement co-founders Larry Diamond and Peter Gray are selling 2 million shares – 1.5 million and 500,000 respectively – to deal with tax liabilities, at the reference share price, grossing them more than $19 million.
Zip said the sell down “represents just a small fraction of the substantial shareholding both co-founders have in the company”.
Zip shares are up nearly 3% on the news to $9.20 after trading resumed today following Wednesday’s trading halt.