Issuer Profile
Listed on the ASX (ASX: ZIP) since 2015, Zip Co Limited (“Zip”) is a leading player in the digital retail finance and payments industry. Operating across two core markets - Australia and New Zealand (ANZ) and the Americas, Zip offers consumers both online and in-store point-of-sale retail finance and digital payment services to consumers of enterprise and SME merchants.
Zip is competing primarily with traditional bank consumer finance, targeting the retail, health, education and travel sectors. The ANZ market offers several credit products; full interest free terms (Zip Pay) more commonly known as a ‘buy now, pay later’ (“BNPL”), or interest free for an initial period (Zip Money) and if the customer’s month end balance is below $1,500 (Zip Plus).
The Zip Master Trust (“ZMT”) is a bankruptcy remote securitisation vehicle created to fund Australian receivables originated by Zip. The Zip Master Trust – Series VFN No. 2 (“VFN2”) is a warehouse that sits within the ZMT. The ZMT is Zip’s primary source of funding receivables with limits of ~$2.25bn (as at September 2023) across four rated term deals and two revolving Variable Funding Notes.
Issuer Need
In 2022, FIIG Securities arranged the issue of $36.2m Class B and Class C Notes in the VFN2 to help diversify funding within VFN2. The Notes had a Scheduled Maturity Date in January and Zip was keen to refinance early and upsize across both tranches to optimise the capital structure and reduce its overall cost of funding.
FIIG Solution
FIIG was able to work collaboratively with Zip to create a new capital structure within VFN2 that maximised senior bank funding. The additional capital from the mezz and junior Notes raised allows Zip to continue to invest in the growth of the Australian business.