Sydney company ZipMoney has secured a $260 million debt facility led by the National Australia Bank, in what the startup claims is the largest such deal in Australian fintech history.
ZipMoney announced to the ASX on Wednesday that the facility would consist of $200 million from NAB, $40 million through two-year bonds issued through FIIG Securities, and $20 million in junior notes and equity. An “immediate refinance of $70 million of existing receivables” will take place using the NAB facility, resulting in an instant reduction in interest for the business.
The startup operates a “buy now, pay later, with no interest” service — integrating into online retail stores to reach consumers — meaning a large cash reserve is imperative.
ZipMoney co-founder and chief operating officer Peter Gray said that passing the due diligence process with NAB was a testament to the IP value of the startup’s credit and fraud decision technology.
“Since founding the company in 2013, we believed that securing a significant banking partner would be integral to supporting Zip.”
The publicly listed company stated that the new facility will have a two-year tenure and is expected to become operational by the end of this week.
“This is a major milestone for Zip. It delivers funding security, provides significant headroom for our rapidly growing origination volumes and an immediate bottom line benefit,” said ZipMoney chief executive Larry Diamond.
“NAB embraced the process and demonstrated a superior understanding of Australian fintech, in particular Zip’s unique customer value proposition.”
The latest facility follows ZipMoney’s $100 million loan in 2015 from US asset manager Victory Park Capital. Victory vice president Harsh Patel said at the time that “traditional financing sources” were reluctant to get involved with Australian fintech.
But in just 18 months that seems to have changed, with NAB capital financing executive Steve Lambert saying this week’s deal backs up its “belief in ZipMoney’s business model”.
NAB head of securitisation origination Sarah Samson added that she was impressed by ZipMoney’s “core technology platform, advanced underwriting processes and strong leadership team”.
In September, ZipMoney acquired personal budgeting startup Pocketbook for $7.5 million, in what was claimed to be Australia’s first fintech-to-fintech merger. This month the Pocketbook brand was nominated for a 2017 FinTech Australia award.