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 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%.