Westpac Group announces underwritten sale of stake in Zip

By Edil Corneille

Westpac announced it will be selling its 10.7 percent stake in Zip by way of a fully underwritten book build to institutional investors domiciled in Australia and other relevant jurisdictions. In 2017, Westpac made an initial $40 million equity investment in Zip, with a subsequent $8.9 million invested in 2019.

Westpac Chief Information Officer, Gary Thursby said, “Larry Diamond, Peter Gray and the management team of Zip have done a tremendous job growing the company, including expanding globally. We look forward to seeing them continue to grow a global customer franchise.

“We are continuing to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our mobile banking apps across Westpac and our Regional bank brands. This would expand our offering to customers and broaden the customers Zip can reach.

“We are also working with Zip on other opportunities for consumer, business, and corporate customers that we believe could be mutually beneficial, while continuing to develop our banking relationship with Zip.”

The offer price for the shares is $6.65 per share, which equates to a discount of 6.07 percent to Zip’s last closing price of $7.08 on October 21, 2020. The decision reflects the approach of the bank to simplifying its business and ensuring the efficient use of capital. The sale will add around 8 basis points to Westpac’s common equity tier 1 capital ratio.

UBS is acting as Sole Lead Manager, Underwriter, and Bookrunner of the offer. The settlement of the transaction is expected to occur on October 26, 2020.