A long-nurtured entry into the American consumer credit market is reinvigorating buy now, pay later leader Zip Co, along with demand for its shares.
Zip will take full control of New York-based QuadPay in a deal that embeds one of the tyros of the US instalment credit industry as a pillar of the global mission for Zip.
A long friendship between the principals of QuadPay and Zip helped bring this deal into the lap of one the Aussie equity market’s darlings.
Zip already held a 14 per cent stake in QuadPay via its acquisition of PartPay in New Zealand.
QuadPay, Zip said, “operates on the same core technology as Zip’s UK and NZ businesses”.
The all-scrip purchase by Zip Co of QuadPay at an enterprise value of US$269 million for now must be read at face value.
Zip’s most dramatic play yet on the global stage made its debut in the absence of even a simplified income statement or balance sheet on the target.
Annualised this and pro-forma that, one day a buy now, pay later outfit or another fintech will define its point of difference with crisp and even audited financial data on the latest showy takeover.
Never mind, investors yesterday bid Zip’s scrip by $1.45 or 39 per cent to $5.20, taking its market capitalisation back through A$2 billion, with around one quarter of this valuation attributed to QuadPay.
There are a range of performance incentives in place to motivate the founders and co-CEOs of Zip’s new US arm – Adam Ezra and Brad Lindenberg – who will join the management team.
QuadPay account for 30 per cent of pro-forma annualised transaction volumes for Zip of A$2.1 billion and 28 per cent of annualised revenue of $180 million.
It’s not all digital zippery at QuadPay, however. In a throw-back to the cultural inefficiencies embedded in American consumer credit practices, clients have the option of making any of the required four (interest-free) payments in-store.