- Zip Co has priced its first allocation from the Zip Master Trust
- The NAB arranged deal was significantly oversubscribed and closed at $500 million, an increase from the estimated $400 million
- Settlement of the deal is expected to close on September 5
Zip Co has priced its first allocation from the Zip Master Trust in a deal arranged by NAB.
This deal was significantly oversubscribed and closed at $500 million, an increase from the original $400 million.
This allocation marks the largest of its nature by any financial company in Australia and is a remarkable achievement for Zip.
“This transaction is another important milestone for Zip and it provides strong validation for our proprietary credit and fraud decision platform,” Zip Co-Founder Peter Gary commented.
“The Zip Master Trust is the perfect structure to support Zip’s funding requirement as we continue to scale, and it will deliver material cost benefits in the medium to long term.”
In July 2019, Zip Co commissioned NAB to arrange a series of ABS investor meetings to establish the Zip Master Trust Program.
In its July 30 announcement, it advised the allocation had been confirmed and an Indicative Term Sheet was issued by NAB on July 29.
The Term Sheet obtained expressions of interest for debt funding of $400 million and once the transaction is completed Zip’s total fund receivables will increase from $731.5 million to $931.5 million.
The aim of this trust is to allow Zip to scale up funding requirements and reduce costs over term. This move could represent a new territory for scrutinisation as payments in the ‘buy now pay later’ branch are less predictable than traditional methods.
Settlement is expected to occur on September 5.
Shares in Zip are up slightly this morning, trading for $3.42 each in a $1.190 billion market cap.