ZIP Co (ASX: ZIP) Announces Major Funding and Capital Update

In a recent ASX announcement, ZIP Co (ASX: ZIP) has detailed a significant ZIP Co funding capital update, substantially reinforcing the buy-now-pay-later provider’s financial foundation across its primary markets. The update outlines financing initiatives totalling over $680 million in new capacity, highlighting improved access to capital markets and a stronger credit profile that positions the company for accelerated expansion.

The digital financial services company has secured US$283.4 million in new United States warehouse facility capacity, successfully priced a A$400 million Australian note issuance at highly competitive rates, and continued executing its $100 million share buyback programme. These initiatives collectively provide ZIP Co with approximately $1 billion in available funding capacity to support growth across Australia and the United States.

Group Chief Financial Officer Gordon Bell stated that the strategic funding initiatives reflect “the strength of our business and credit performance across the Group” whilst delivering material cost savings. The company remains focused on building scalable platforms to ensure readiness for significant growth opportunities.

What is ZIP Co’s New US Funding Facility?

ZIP Co has established a substantial US$283.4 million warehouse facility in the United States, partnering with two high-quality funding providers to create enhanced growth capacity. The two-year facility represents a significant expansion of the company’s American funding infrastructure and is immediately available for market expansion initiatives.

The facility structure delivers several strategic advantages for ZIP Co’s operations. Enhanced growth capacity supports accelerated penetration into the competitive US buy-now-pay-later market, whilst improved cost structures provide material improvements in funding costs versus existing arrangements. Furthermore, partner diversification reduces concentration risk exposure across the funding portfolio.

Current US Funding Architecture:

The expanded capacity positions ZIP Co to capitalise on market opportunities whilst maintaining operational and financial flexibility. The October 2027 maturity date provides an extended runway for American market expansion without near-term refinancing pressures.

How Does ZIP Co Use Asset-Backed Securities for Funding?

Asset-Backed Securities (ABS) represent a critical funding mechanism enabling buy-now-pay-later companies like ZIP Co to efficiently finance their receivables portfolios. This component of the ZIP Co funding capital update provides investors with exposure to diversified consumer payment streams whilst offering the company cost-effective capital access.

Consumer receivables are pooled within trust structures, creating diversified portfolios that reduce individual credit risk. Securities are issued against these pools, with investors receiving payments as consumers repay their obligations. This structure offers several strategic benefits:

• Cost Efficiency: ABS typically provides lower funding costs than traditional corporate debt.
• Risk Distribution: It spreads credit exposure across a broad institutional investor base.
• Scalability: The model enables rapid expansion of lending capacity without equity dilution.
• Balance Sheet Optimisation: It removes receivables from the balance sheet, improving capital efficiency.

ZIP Co successfully completed a A$400 million rated note issuance within its Master Trust structure (2025-2 series), achieving exceptional pricing that reflects its strengthened credit profile. The issuance achieved a weighted average margin of 1.37%, a remarkable improvement compared to previous transactions, showcasing a clear trajectory of improved market perception.

Pricing Improvement Trajectory:

The transaction will refinance the callable 2023-2 note series, resulting in an approximately $95 million net increase in funding capacity and delivering substantial interest expense savings.

What is the Progress on the ZIP Co Share Buyback?

As part of its disciplined capital management strategy, the ZIP Co share buyback programme continues to be executed. The company is progressing with its $100 million on-market share buyback, demonstrating management’s confidence in the company’s intrinsic valuation.

To date, the company has purchased 21.4 million shares for a total consideration of $58.4 million, representing 58.4% completion of the authorised programme. This leaves $41.6 million available for additional share repurchases.

Buyback Programme Metrics:

• Total Authorisation: $100 million
• Capital Deployed: $58.4 million (58.4% completion)
• Shares Purchased: 21.4 million
• Remaining Authorisation: $41.6 million
• Average Price: Approximately $2.73 per share

With 1,233,155,283 shares on issue, the buyback enhances earnings per share through a reduced share count, delivering direct capital return and signalling disciplined capital allocation from management.

Enhanced Funding and Future Outlook

This comprehensive ZIP Co funding capital update has positioned the company for accelerated expansion across its core geographical markets. As of 31 October 2025, ZIP Co retained US$348.4 million of undrawn headroom in the United States and A$344.3 million in Australia.

This enhanced funding position supports the company’s strategy to build scalable technology platforms whilst maintaining financial flexibility for opportunistic growth. Management has indicated a clear focus on executing significant growth opportunities, leveraging the improved cost structures to enhance its competitive positioning.

Australian Master Trust Funding Structure:

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