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Zip shares soar after US acquisition and $200 million funding deal

Instead of a capital raising, which is traditionally conducted at a discount to the prevailing share price, Zip worked with Merrill Lynch to provide funding certainty “but at a future price that we thought better represented a return to shareholders,” said Mr Diamond.

The equity deals will deliver more than 23 per cent of Zip to QuadPay’s investors, and another 6 per cent to Heights Captial.

Zip said Quadpay generated $17.8 million worth of revenue for the March quarter and attracted 360,581 new customers for the quarter.

Pro forma figures based on the March quarter for both Zip, QuadPay and its other buy now pay later operations show annualised revenue totalling $250 million, 3.5 million customers and 26,200 merchants, according to Zip.

Zip picked up its initial stake in QuadPay last year with the acquisition of New Zealand-based instalment payments provider PartPay for up to $NZ66 million ($63 million) in cash and scrip.

The acquisition delivered Zip a presence in New Zealand and the UK via PartPay’s wholly-owned operations, as well as a 25 per cent stake in South Africa’s Payflex, and a 15 per cent stake in QuadPay.

Mr Diamond said that talks of a deal with QuadPay investors began early this year and were put on ice when COVID-19 struck.


“Once we got the confidence that the sector was in fact resilient … we then re-engaged and ran pretty hard at closing the deal,” he said.

Zip said it was encouraged by QuadPay’s continued strong growth and performance during the pandemic and said “similar to Zip there has been no deterioration in its loan book performance, demonstrating the resilience of the buy now pay later model.”

A recent report from Morgan Financial on both Zip and Afterpay noted the robust performance of both companies during the pandemic so far, with “the only obvious negative being some softening in sequential sales growth.”

Morgans has a price target of $4.09 on Zip.

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