Zip Co is set to pull off a PIPE dream.

Heights Capital Management is little known in Australian private equity circles. It specialises in PIPEs, is based in California and is part of Susquehanna Investment Group. Susquehanna invests across equities, fixed income, commodities, derivatives and private equity, and is best known for its quantitative trading systems.
Funds raised would help bankroll Zip’s mooted expansion in the United States, including its acquisition of QuadPay.
Zip is believed to be preparing to pay about $US300 million for QuadPay in a cash and scrip deal.
Street Talk revealed the QuadPay acquisition and associated raising on Sunday night. Zip’s shares were halted from trading on Monday.
Sources said the transaction was complex with the only capital raised expected to be the new convertible notes issued to Heights Capital Management. However, Zip believed the convertible notes would be the best outcome for shareholders.
It is understood Zip told a handful of investors about the transaction across the weekend.
Zip’s PIPE comes as bankers across the market have spent the past few months trying to match capital hungry Australian companies with cashed up private equity firms.
PIPEs are common in the United States, but have been slow to take off in Australia. Bankers expected that PIPEs were one way local companies could raise funds quickly in a market that was heavily impacted by COVID-19.
US firm Bain Capital Credit gave hope to a wave of PIPE deals when it participated in online travel business Webjet’s equity raising in April.
Zip was advised by Bank of America, Arnold Bloch Leibler and Skadden Arps, while QuadPay is advised by Gilbert + Tobin and DLA Piper.