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Zip Co announces $60 million capital raising and AGM update

James Mickleboro
money loading, invest, boost earnings

The Zip Co Ltd (ASX: Z1P) share price won’t be going anywhere today.

This morning the payments company requested a trading halt ahead of its annual general meeting.

Why are Zip Co’s shares in a trading halt?

Zip Co requested a trading halt whilst it undertakes a $60 million capital raising.

The company is aiming to raise $50 million through a non-underwritten placement to professional and sophisticated investors and a $10 million through a share purchase plan.

The latter gives eligible shareholders the opportunity to subscribe for new shares up to a maximum of $27,000 per shareholder.

Zip Co intends to raise the funds at an offer price of $3.70 per share. This represents a 5.6% discount to its last close price.

Why is Zip Co raising funds?

Management advised that it is raising the $60 million to fund its expansion into the UK market, expand its product range, increase its investment in product and technology, and strengthen its balance sheet.

It believes the UK market represents a major opportunity for Zip Co. It estimates that the market is worth upwards of $630 billion, which is notably larger than the ANZ market.

In respect to the expansion of its product range. Zip Co intends to launch and accelerate the growth of its Zip Biz product. This is a buy now pay later solution for small businesses.

It provides up to $25,000 in revolving credit and aims to approve applicants within just 3 minutes. A full rollout is expected in Q3 2020.

What about its AGM?

At its annual general meeting Zip Co provided the market with an update on its outlook for FY 2020.

According to the release, it continues to target 2.5 million customers and $2.2 billion in annualised transaction volume by the end of June 2020.

This is almost double the 1.3 million customers and transaction volume of $1,128.5 million it recorded in FY 2019.

The post Zip Co announces $60 million capital raising and AGM update appeared first on Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019