Home Industry Listed Tech zipMoney raises $20.6 million as it readies for Pocketbook acquisition

zipMoney raises $20.6 million as it readies for Pocketbook acquisition

Digital retail finance industry company zipMoney is raising $20.6 million to provide additional loan book equity capital, expansion capital and to fund the proposed acquisition of personal finance management software provider Pocketbook, after the signing of a non-binding agreement between the two companies.

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.

According to zipMoney managing director Larry Diamond, 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. The facility is expected to approximately halve the weighted average cost of capital of zipMoney’s loan book, from approximately 12% to approximately 6%.

The acquisition of Pocketbook is subject to zipMoney (ASX:ZML) completing satisfactory due diligence and the Pocketbook founders and other shareholders agreeing to the transaction.

The total consideration for the Pocketbook acquisition is $7.5 million, comprised of $6 million upfront consideration and $1.5 million deferred purchase consideration, with the deal subject to performance milestones.

The cash requirement is estimated at $2.5 million, with the balance in zipMoney shares at the capital raising price.

Diamond says the proposed acquisition of Pocketbook provides an opportunity to acquire users and gain valuable data and analytics to strengthen zipMoney’s lending and credit algorithms – while providing additional expansion capital to fund a combination of sales and marketing, and product and technology initiatives, to support and accelerate the company’s growth.

Pocketbook has been receiving and growing revenue through the provision of market-leading analytics services and Diamond says the business is highly complementary to zipMoney’s existing business, expanding its customer base and offering cross-selling opportunities with the potential to deliver complementary financial products within the Pocketbook app.

Commenting on the proposed acquisition of Pocketbook, zipMoney’s executive director and chief operating officer Peter Gray said 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”.

“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.”

zipMoney casts itself as a leader in the Australasian fintech sector, offering a “unique range of digital point of sale credit and payment solutions”.

Gray says the company 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.

And, he says zipMoney 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%  with April 2016 month-on-month revenue growth at 159%.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).