DIGITAL payment platform zipMoney (ASX:ZML) has raised $20.6 million to fund its acquisition of Pocketbook Holdings.
The Sydney-based company raised the capital in a placement to institutional and sophisticated investors of 37.5 million shares at 55c apiece.
The price represents a 14.4 per cent discount to zipMoney's 30-day volume weighted average price and will be issued via two tranches.
The funds will also provide loan book equity capital to secure a new securitisation warehouse facility and support sales and marketing initiatives. The facility is expected to halve the company's weighted average cost of capital to 6 per cent.
ZipMoney managing director and CEO Larry Diamond says the oversubscribed placement demonstrates confidence in the business.
"The placement is a clear vote of confidence in zipMoney's team and business model from the institutional and sophisticated investor community, with leading institutional investors added to our register," Diamond says.
"We look forward to using these funds to continue to accelerate zipMoney's growth and provide a superior experience for our customers."
ZipMoney chairman Philip Crutchfield has agreed to subscribe for about 320,000 shares subject to shareholder approval at an extraordinary general meeting on July 21.
The company has also entered into a non-binding indicative term sheet to acquire Pocketbook for $7.5 million, including $6 million upfront and $1.5 million deferred subject to performance milestones.
The acquisition is expected to provide an opportunity to capture users and gain valuable data and analytics to strengthen zipMoney's lending and credit algorithms.
ZipMoney executive director and COO Peter Gray says the company would be able to deliver complementary financial products within the Pocketbook app.
"The acquisition of Pocketbook is consistent with the company's strategy to become Australia's leading customer-friendly provider in the digitised consumer finance space," Gray says.
"The platform provides an exciting way to leverage Big Data to engage with our user base and deliver added value.
"Pocketbook has exceptional founders, who would be retained post-acquisition and would operate Pocketbook as a stand-alone business unit within the zipMoney group."
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