(Bloomberg) -- Zilch Technology Ltd.’s chief financial officer says the buy-now-pay-later lender is one step closer to issuing its first publicly-rated asset-backed security after expanding an existing debt deal and bringing on new investors.
The UK fintech, which allows customers to split their shopping bill into interest-free payments, said it expanded its existing £100 million ($129 million) securitization facility with Deutsche Bank AG by £50 million and brought in two new unnamed credit-fund investors. The credit line will enable Zilch to provide up to £10 billion in transactions annually, according to a statement Monday.
Monday’s credit-line overhaul bodes well for a publicly-rated securitization deal, Zilch CFO Hugh Courtney said.
“There are lots of discerning credit investors out there who would be interested in the flexibility of an even larger securitization that’s tranched and rated,” he told Bloomberg in an interview. “It’s a good time for the market to be looking at these types of vehicles.”
A handful of other fintech lenders have been able to raise funds in the debt market lately by offloading loans on their balance sheet to investors via asset-backed deals, even as venture capital firms tighten their purse strings in a higher rate environment.
Sweden’s Klarna recently struck a deal with a subsidiary of hedge fund Elliott Investment Management, giving the lender up to £30 billion of fresh firepower to grow its business. PayPal Holdings Inc. made a similar arrangement with KKR & Co Inc. for its European buy-now-pay-later loans.
Zilch differs from other BNPL lenders because it makes money through ad revenues and other avenues rather than through a flat fee charged to merchants, according to Chief Executive Officer Philip Belamant.
Like Klarna, Zilch has also been contemplating an initial public offering in 2025 while publicly traded peers like Affirm Holdings and PayPal Holdings Inc. have seen their shares rally over the past 12 months.
The existing securitization, originally signed with Deutsche Bank in June, is expected to drive growth and help push Zilch toward its goal of becoming a listed company, Belamant said at the time.
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