zipMoney secures $40M strategic investment and relationship with Westpac
zipMoney Limited (ASX: ZML) is pleased to announce that it has secured a $40 million strategic investment in the Company from Westpac Banking Corporation (ASX: WBC) by way of a private share placement.
Westpac and Zip have also entered a strategic relationship which allows the parties to explore the integration of Zip’s products and services across Westpac’s network throughout Australia. As part of the strategic relationship, the parties will explore other initiatives including the provision of currently in-development business-to-business products and services to Westpac.
The WBC strategic investment will be by way of a $40 million ordinary equity investment comprising the subscription of 49,382,716 fully paid ordinary zipMoney shares at a price of $0.81 per share, representing:
- a 14.1% premium to the last closing price of $0.71 per share on 4th August 2017; and
- a 18.4% premium to the two-month VWAP of $0.68 per share as at 4th August 2017.
In addition, WBC will be granted 9.8 million Performance Options (371,964 of which will be subject to shareholder approval to be obtained at Zip’s next annual general meeting) with an exercise price of $0.81 per share, representing, if all are exercised, a total additional investment of up to $8 million. The Performance Options will be subject to vesting conditions as set out in the Schedule to this announcement. Further key terms of the transaction have also been summarised in the Schedule.
The proceeds from the investment will be used to accelerate Zip’s growth plans and the development of new products and technologies, including enhancing its data science and proprietary decisioning capabilities. This investment will also provide additional equity capital to support the continued growth in the zipMoney loan book. This investment, combined with the recent $260 million asset-backed securitisation warehouse program implemented on 25 May 2017, provides Zip with a scalable funding platform, from which to capitalise on the present market opportunity.
The WBC strategic investment is conditional on certain closing conditions and is expected to be completed on 10 August 2017, at which time WBC will become a new substantial shareholder with approximately 17.11% ownership of zipMoney, based on the post subscription shares outstanding of 288,575,725[1].
As part of the strategic investment, the Zip Board has agreed to appoint an additional non-executive director to be nominated by Westpac.
Zip CEO and Managing Director, Larry Diamond, commented:
“This strategic deal with Westpac is a truly transformational moment for Zip and our unique customer value proposition. It is a serious validation of the success of the Zip platform and offering, and the strategic relationship arrangements will deliver a significant opportunity to further accelerate the growth of our merchant network and origination volumes. We look forward to welcoming Westpac onto the register and to their ongoing support in the growth of our Company.”
Westpac Group Executive, Strategy & Enterprise Services, Gary Thursby, commented:
“Westpac is excited to be working with one of Australia’s leading Fintechs with a strong vision for the future of payments in Australia. Our strategic relationship with Zip is another example of Westpac’s commitment to supporting leading Australian entrepreneurs and Fintechs who are looking to bring great new capability to Australian consumers. Zip’s real-time data analytics and proprietary platform offer customers seamless payment solutions. We look forward to working with Zip to develop these capabilities and offer Westpac customers more choice in the changing payments landscape.”
Morgan Stanley acted as financial adviser and placement agent to zipMoney, and Arnold Bloch Leibler acted as legal adviser to zipMoney.
[1] Together with existing Westpac Group relevant interests in Zip (based on such figures as at 3 August 2017), the total relevant interest of the Westpac Group post-completion is anticipated to be approximately 17.17%.
