Zip Co Limited (ASX: Z1P) and its subsidiaries (collectively “zipMoney”) offer point-of-sale credit and digital payment services to consumers and merchants. It is targeting a $100bn market opportunity across the retail, heath, education and travel sectors. zipMoney has developed a scalable technology platform that is disrupting the consumer finance space with a fully digital offering. Its success to date is evidenced by the origination of over $550m of receivables from more than 7,750 merchants and 500,000 customers.
To fund its ongoing growth, zipMoney established a $390m asset backed securitisation warehouse program (upsized in 2018 from $260m the previous year), which provides the option to refinance the facility through the rated securitisation market. To complete the program FIIG Securities arranged $60m of Class B mezzanine notes to complement $300m in senior bank funding and $30m in junior notes and equity. The Class B mezzanine notes were issued in two tranches ($40m in May 2017 and $20m in March 2018). The program is the next step in establishing a diversified funding program for zipMoney that provides headroom for growth and lowers its average cost of funds.
zipMoney is the latest non-bank financial services business to utilise the bond market to broaden its capital base. FIIG has provided a range of funding solutions to the sector, including:
- Traditional securitisation structures;
- Corporate style senior facilities, including acquisition of loan books;
- Funding diversification including refinancing and/or expansion of existing funding lines; and
- Optimising capital structure through a range of terms including terms of greater than 4 years, fixed or floating rate, secured and unsecured.