Zip Co Limited (“Zip”) is an ASX listed (ASX: Z1P) non-bank finance company offering both online and in-store point-of-sale retail finance and digital payment services to consumers of enterprise and SME merchants. Zip provide consumers with a ‘buy now, pay later’ solution where consumers have the power to pay over an interest free period through the provision of a line of credit. As at March 2019 it was originating around $100m of receivables per month from more than 14,000 merchants and 1.1 million customers.
As at 31 March 2019, Zip’s securitisation warehouse program (zipMoney Trust 2017-1) was drawn to ~$531m including $60m of Class B mezzanine notes. As part of their ongoing funding requirements, Zip extended the warehouse for a further two years and offered existing Class B noteholders an option to exchange on a one-for-one basis into $60m of new Class B notes in the warehouse which also provides the option to refinance the facility through the rated securitisation market. The extension of the program provides Zip with the flexibility to maintain growth and head towards its medium term goal of establishing a rated trust which will further diversify funding, provide headroom for growth and will lower its average cost of funds.
Zip is the latest non-bank financial services business to utilise the bond market to broaden its capital base. FIIG has provided a range of funding solutions to the sector, including:
- Traditional securitisation structures;
- Corporate style senior facilities, including acquisition of loan books;
- Funding diversification including refinancing and/or expansion of existing funding lines; and
- Optimising capital structure through a range of terms including terms of greater than 4 years, fixed or floating rate, secured and unsecured.