Good evening,

Zip Co’s founding story - former Macquarie banker Larry Diamond meets finance company executive Peter Gray for a beer at the Commodore Hotel - and how they survived the 2020 market meltdown is the stuff of Australian capital markets folklore.

The pair, on the perennial Zip roller-coaster ride, are back with a new challenge; navigating volatile markets to raise equity to fund an acquisition and ramp up its US expansion plans.

Zip and its bankers spent the weekend with their crystal balls trying to figure out what Ukraine, interest rate expectations, Block’s result, an M&A deal and even wet weather in Sydney would mean for the group’s share price.

They’ve been in talks with a bunch of institutional investors to help price the proposed raising, and ultimately back-stop it should things turn sour.

Investors were expecting a $100 million to $150 million deal, although had yet to see final terms as at dinner time on Sunday. The deal’s slated for Monday, which is when Zip’s due to hand down its half-year results, having already delayed the date twice in the past week, subject to market conditions.

Should it hit the tape as expected, it will be another chapter in the Zip story. The stock’s off 80 per cent in the past year (as is the price of its target Sezzle) but still the founders are going for growth.

Elsewhere, Magellan’s copped a double downgrade at Morningstar, while Humm has another private equity suitor on its tail.

Happy reading,
Anthony Macdonald, Sarah Thompson and Kanika Sood
Street Talk editors