Westpac to sell stake in buy-now-pay- later firm Zip

Bengaluru

WESTPAC Banking Corp said on Wednesday it would sell its 10.7 per cent stake in buy-now-pay-later firm Zip Co Ltd in a deal valued at about A$368 million (S$353.2 million), as it aims to trim its portfolio and improve its capital position.

Australia's second-largest lender, whose capital has been eroded by a record lawsuit settlement and surge in bad-debt provisions due to the coronavirus outbreak, said the sale will add around eight basis points to its common equity tier 1 capital ratio. The offer price for the sale is A$6.65 per share, a discount of 6.1 per cent to Zip's last closing price of A$7.08, and implies a deal value of about A$368 million for Westpac's stake, based on Refinitiv data.

This week, Westpac teamed up with Zip's rival Afterpay Ltd to offer savings accounts and budgeting tools, marking a push into the buy-now-pay-later sector.

"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," said Westpac chief information officer Gary Thursby. Westpac said settlement of the sale, a bookbuild to institutional investors being managed and underwritten by UBS, is expected to occur on Oct 26. REUTERS