Zip closed its share purchase plan yesterday, raising A$23.9 million – less than half what it hoped to raise under the plan.

The SPP follows the completion of a $148.7 million institutional placement early last month. 

Shares were issued at $1.90 under the institutional placement and $1.48 under the share purchase plan. The issue price under the SPP was set at the lower of the placement price or a 2 per cent discount to the five-day volume weighted average price of Zip shares up to and including the closing date of the SPP (April 1).

Zip had set out to raise up to $50 million under the SPP but its falling share price would have deterred many investors.

The share price has fallen from a high above $9.70 in April last year to $2.20 in February, just before the announcement of its takeover of rival buy now pay later company Sezzle. Now the stock is trading around $1.50.

The equity raising forms part of the Sezzle deal, which values Sezzle at $491 million.

Completion of the acquisition is not dependent on the success of the capital raising. Zip is issuing Zip shares to Sezzle shareholders. The capital raising was designed to strengthen the company’s balance sheet and fund further growth.

The combined Zip and Sezzle group will have total transaction volume of $10.4 billion – Zip contributing $7.9 billion and Sezzle $2.5 billion.

Combined customer numbers are 13.3 million (Zip 9.9 million and Sezzle 3.4 million) and combined merchant numbers are 128,800 (Zip 81,800 and Sezzle 47,000).

The companies’ latest results show Zip increasing revenue by 88.5 per cent year-on-year to $301.3 million and Sezzle more than doubling income to $114.8 million. 

Zip said the deal would enhance its scale and product offerings and give it the capacity to grow more quickly in the United States, where Sezzle does most of its business.