The Zip Co Ltd (ASX: Z1P) share price has returned from its trading halt this morning and edged lower.
At the time of writing the payments company's shares are down 1% to $1.64.
Why was Zip in a trading halt?
Zip requested a trading halt on Wednesday whilst it sought to raise $42.8 million before costs via a placement of 28 million ordinary shares.
This morning the company announced that it has successfully completed the placement thanks to support from new and existing institutional, sophisticated and professional investors. In fact, demand was so high for its shares that the placement closed early.
The issue price for the placement was $1.53 per share, which represents a 7.8% discount to the last traded price of the company's shares.
The money raised from the placement could increase by a further $8.9 million if banking giant Westpac Banking Corp (ASX: WBC) decides to take up its top-up right. This was granted to the bank as part of its investment in Zip in 2017 and will allow it to maintain its percentage holding in the company.
Notice has been given to Westpac, but it has not yet advised whether it will take advantage of its top-up right. It has until April 1 to decide.
What now?
Larry Diamond, managing director and CEO of Zip, explained that the additional capital will be used to fund its growth strategies.
He said: "We greatly appreciate the support of our existing shareholders that participated in the Placement and welcome all the new shareholders that have joined our register as part of this equity raise. The additional equity capital will enable Zip to continue its significant growth through further investment to support our brand, enhance our product, and monetise our assets. The capital raising will also provide a stronger balance sheet to capitalise on growth opportunities, both organic and inorganic."
Should you invest?
With Afterpay Touch Group Ltd (ASX: APT), Splitit Ltd (ASX: SPT), and FlexiGroup Limited (ASX: FXL) all offering buy now, pay later services, investors certainly have a lot of options in the space.
Whilst Afterpay Touch remains my preferred pick due to its global growth opportunities, I think Zip Co is well worth considering as well. I've been very impressed with its progress and believe it has a bright future ahead of it.
