The Zip Co Ltd (ASX: Z1P) share price is one to watch as the company looks to wrap up its $30 million share purchase plan.
The post Here’s why the Zip (ASX:Z1P) share price is in focus today appeared first on The Motley Fool Australia. –
Why is the Zip share price on watch?
Zip has now conducted a fully underwritten placement of new fully paid ordinary shares to institutional, sophisticated and professional investors.
The Aussie BNPL group managed to raise $120 million before costs at an issue price of $5.34 per share. That compares to a closing Zip share price of $5.11 after falling 1.2% lower in yesterday’s trade.
Eligible shareholders are being given the opportunity to participate in a Share Purchase Plan (SPP) and subscribe for up to $30,000 of new shares. The SPP shares will be on offer at the lesser of $5.34 and the volume-weighted average price in the five trading days up to and including 13 January 2021.
The Zip share price is one to watch as the group seeks to raise $30 million before costs under the SPP. The SPP is not underwritten and Zip may decide to increase this cap and accept oversubscriptions and/or scale back applications.
How is Zip looking to spend the money?
Zip has advised that 58% of its successful capital raising will be used to continue the company’s growth in the United States (US). The US represents an addressable retail market of $5 trillion with significant market share on offer.
It also advised that 10% of the capital, or $15 million, will be deployed in the UK to scale Zip’s operation and establish further infrastructure. An additional 24% of the raise, or $35 million, is set to support the company’s newly established New Markets division, which is focused on further acquisitions and growth initiatives.
It’s been a good year for BNPL shareholders in 2020, and Zip is no exception. The Zip share price is up 44.4% since the start of the year and 1,088.4% in the last 5 years.
The Zip share price is one to watch in early trade as the BNPL continues with its capital raising plans. Zip currently has a market capitalisation of $2.8 billion, second in the ASX-listed BNPL companies behind the $32.3 billion Afterpay Ltd (ASX: APT).
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
- How to get the best out of the 2021 mining boom
- In a record-breaking year, here are some of the world’s most popular shares
- ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
- Is the Zip (ASX:Z1P) share price a buy yet?
- Why shares are less risky now than 30 years ago
Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.