Zip Co raises $400 million for international expansion

Zip Co raises $400 million for international expansion

Zip Co co-founder and COO Peter Gray (provided).

Zip Co (ASX: Z1P) has priced $400 million of senior convertible notes to fund expansion into new regions on the back of major growth in the US.

Co-founder and COO Peter Gray says the move will keep shareholders happy, with the notes set to mature in 2028.

"We are very pleased with the strong global demand for this offering," says Gray.

"This transaction further diversifies Zip's sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders."

The $400 million in convertible notes mirrors the approach recently taken by buy-now pay-later (BNPL) competitor Afterpay (ASX: APT).

However, Zip's latest raise doesn't come close to the whopping $1.5 billion secured by Afterpay's settlement of convertible notes due in 2026.

The offering is being marketed to eligible investors and the notes are set to be listed on the official list of the Singapore Securities Trading exchange. Settlement is expected on or about 23 April 2021.

Meanwhile, co-founders Larry Diamond and Peter Gray have executed a sell-down of shares of up to 1.5 million and 500,000 ordinary shares respectively.

Proceeds from the sale will be used primarily to fund their respective tax liabilities and represents just a small fraction of the substantial shareholding both co-founders have in the company.

At today's share price the sell-down is worth around $19.2 million.

The influx of capital comes as Zip's US arm Quadpay is soaring, having reported record third quarter results earlier this week.

Quadpay's transaction volumes more than doubled to hit $1.6 billion in the latest quarter on the back of an influx of 674,000 new customers.

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