After initially sliding lower with the likes of Afterpay Touch Group Ltd (ASX: APT), Sezzle Inc (ASX: SZL), and the rest of the tech sector, in afternoon trade the Zip Co Ltd (ASX: Z1P) share price has rebounded and pushed higher following the release of a positive announcement.
At the time of writing the Zip Co share price is up 2% to $3.44.
What did Zip Co announce?
Late this morning Zip Co announced that it has priced its first issuance from the Zip Master Trust.
According to the release, the deal was arranged by National Australia Bank Ltd (ASX: NAB) and was significantly oversubscribed.
So much so, the deal raised a mammoth $500 million, which was 25% higher than the original mandate of $400 million. This means the issuance is the largest of its nature by a financial technology company in Australia.
The payments company's chief operating officer and co-founder, Peter Gray, was very pleased with the issuance.
He said: "This transaction is another important milestone for Zip and fintech more broadly. It provides strong validation for our proprietary credit and fraud decision platform, and our utilisation of significant amounts of data to deliver compliant and responsible lending decisions."
"The Zip Master Trust is the perfect structure to support Zip's funding requirement as we continue to scale, and it will deliver material cost benefits in the medium to long term. It is great to keep the momentum going and is yet another example of Zip executing on its strategic objectives," Mr Gray added.
Settlement on the deal is expected on September 5 2019.
This appears to be a very good result for Zip Co. Not only does it now have a larger pool of funds to support its growth, it will also reduce its costs over the medium term. In light of this, I can't say I'm surprised to see its shares push higher despite the market weakness.
