zipMoney has raised $20.6 million to provide additional loan book equity capital, expansion capital and to fund the acquisition of Pocketbook Holdings.
zipMoney, a leading player in the Australian digital retail finance industry, has raised $20.6 million to provide additional loan book equity capital, expansion capital and to fund the proposed acquisition of Pocketbook Holdings.
The placement to institutional investors, superannuation funds and sophisticated investors will issue 37.5 million shares at $0.55 per share, a 14.4% discount to the company's 30-day volume weighted average price.
Managing director Larry Diamond said: The placement is a clear vote of confidence in zipMoney's team and business model from institutional and sophisticated investors, with several leading institutional investors joining our register via the placement.
The primary use of funds is to provide additional loan book equity capital to help zipMoney secure a new securitisation warehouse facility on the best possible terms. Such a facility could be expected to halve the weighted average cost of capital of zipMoney's loan book.
The funds raised will also be used to provide additional expansion capital to fund a combination of sales and marketing initiatives and product and technology initiatives, which will support and accelerate zipMoney's exciting growth profile.
The proposed acquisition of Pocketbook, which remains subject to successful completion of due diligence by zipMoney, provides an opportunity to acquire users and gain valuable data and analytics to strengthen zipMoney's lending and credit algorithms.
Pocketbook is an innovative personal finance management software that has been operating since 2012. Pocketbook provides a free money management and budgeting tool and app that integrates with the customers bank account, and is able to sync data with most major Australian financial institutions, including the big 4 banks. It has strong customer traction in the Australian market, with over 200,000 users, and is highly acclaimed by industry leading bodies (including Choice, AIIA, ACMA and Forrester Research).
The upfront consideration would be $6 million with an additional $1.5 million deferred purchase consideration, subject to various performance milestones. The cash requirement is currently estimated at $2.5 million, with the balance in zipMoney shares at the capital raising price.
Pocketbook has been receiving and growing revenue through the provision of market leading analytics services and zipMoney believes that Pocketbook is highly complementary to its existing business. The acquisition would expand zipMoney's customer base and offer cross-selling opportunities. zipMoney would also have the potential to deliver complementary financial products within the Pocketbook app, enhancing the overall product experience.
zipMoney COO Peter Gray said: The acquisition of Pocketbook is consistent with the company's strategy to become Australias leading customer-friendly provider in the digitised consumer finance space. The platform would provide 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.
zipMoney is a leader in the Australasian fintech sector, offering a unique range of digital point of sale credit and payment solutions. It is building momentum with lighthouse brands across its key product offerings, including Thermomix, Open Colleges, the Co-op, Bicycles Online, 99 Bikes, OZ Design, Coco Republic and tyresales.com.au.
It has 100% owned proprietary technology that together with the use of Big Data supports a differentiated product with high barriers to entry, and has experienced quarter on quarter revenue growth of more than 100%. April 2016 month on month revenue growth was 159%.
The buy now, pay later sector is shifting, with growing fintech companies like zipMoney and Afterpay dominating market share and attracting significant investor interest zipMoney's share price has risen 250% since listing in September 2015 and Afterpay's share price has risen 40% since listing in May 2016. The rising number of partnerships between financial service providers and fintech companies suggest that incumbent players like Flexigroup are also recognising this shift. Flexigroup's investment in Kikka, an online, non-bank lender that provides a revolving line of credit to SMEs, illustrates the growing interest in this burgeoning space.