The money has been invested by a mix of institutional investors, superannuation funds and sophisticated investors. The funding will be used to provide additional loan book equity capital and expansion capital for zipMoney, as well as to fund the proposed acquisition of Pocketbook Holdings Pty Ltd.
zipMoney operates an entirely digital platform that uses big data to fuel real-time consumer responses. The company offers point-of-sale credit and payment services across the retail, education, health and travel industries in Australia. Once a purchase is authorised using zipMoney, the retailer will be paid on the customer’s behalf and that customer then makes payments to zipMoney. The financing option appears as a payment add-on at the point of checkout on partner company websites, in much the same way that PayPal does.
zipMoney raised A$5m through a listing on the Australian Stock Exchange in September 2015. The company then closed a $108m securitisation with Victory Park Capital in December 2015. It would now appear that further securitisation activity is on the horizon. As noted above, the primary purpose for raising the A$20.6m was to provide additional loan book equity capital for the platform. This will help zipMoney to secure a new securitisation warehouse facility on the “best possible terms”. Such a facility “could be expected to approximately halve the weighted average cost of capital of zipMoney’s loan book”.
The A$20.6m placement will comprise the issue of 37.5m of shares at the price of A$0.55 per share – a 14.4% discount to the company’s 30-day volume weighted average price.
zipMoney still needs to complete its due diligencing of the Pocketbook acquisition, but the price has been set at A$6m, with an additional A$1.5m deferred purchase consideration which will be subject to a number of performance milestones. The amount of cash required to complete the transaction is estimated to be A$2.5m, with the balance made up by zipMoney shares at the capital raising price.
Pocketbook is a personal finance management software which has been around since 2012. The company provides users with greater clarity over their personal finances through the provision of a free money management and budgeting tool and app – which integrate with a customer’s bank account. The tech is able to sync data with most major Australian financial institutions, including the Big 4 banks. Pocketbook currently has over 200,000 users. zipMoney sees the company as complementary to its existing services on two fronts. The first relates to acquisition; there are clear cross-selling opportunities into Pocketbook’s customer base for zipMoney.zipMoney will also look to leverage Pocketbook data in order to strengthen its credit algorithms. This acquisition – should it come to fruition – is somewhat reminiscent of Prosper’s move to acquire BillGuard in September 2015 (for a sum of over $30m in cash).
The equity money is moving in the Australian market of late, with small business lender Kikka Capital securing $2m in equity and a funding line from FlexiGroup last week. That investment allows Kikka access to FlexiGroup’s 700,000 strong borrower base. Cross-selling partnerships between non-bank lenders and technology based service providers are very much en vogue down under.