Wednesday 09 March 2022 by David Ooi Zagga-Case-Study Trade opportunities

New Issue Case Study - FIIG Sole Lead Arranger for additional Zagga Notes to fund further business growth

Last week FIIG was the sole lead arranger of a tap to the existing 6.00% November 2026 Notes issued by Zagga Investment Lending Trust 7 (“ZILT7”). Priced to yield 6.50% to the scheduled maturity in November 2025, they attracted strong interest from wholesale and institutional investors. The final book closed with $13m raised. These funds will be consolidated with the existing Zagga Notes and the total of $43m will be used to support growth of the business.

The Notes provide investors with exposure to a diversified portfolio of loans that are secured by registered first mortgages. The Notes are senior secured and benefit from a pool of contractual rights to senior Commercial Real Estate Debt (“CRED”) loans secured by Australian real estate plus credit enhancement in the form of first loss funding provided by Zagga. The robustness of the ZILT7 structure coupled with Zagga’s strong track record were key attractions to investors.

The ZILT7 Note augments Zagga’s funding by delivering long term, scalable funding accessed via the Debt Capital Markets. Capital raised will enable Zagga to access larger, higher quality transactions within the mid-market CRED space.

The Group

ZILT7 is a special purpose company within the Zagga ecosystem, specifically established to fund a portfolio of qualifying loans that secure the Notes.

Zagga is a boutique investment manager and non-bank lender focussing primarily on the CRED sector. Zagga was founded in 2016 and funded its first loan investment in June 2017. Zagga directly holds both an Australian Financial Services Licence, and an Australian Credit Licence, from ASIC.

Zagga operates with an ‘investor first’ approach, led by a strong executive team with many years experience in property lending in Australian major banks and supported by highly experienced credit and operations teams.

Zagga’s objective is to generate high-yielding (in comparison with bank deposits or similar products) alternative investment opportunities through facilitating the funding of high-quality loan transactions.

Since inception, Zagga has funded over 150 transactions across a spectrum of loan purposes including business, commercial, and residential property, helping borrowers bring major projects to fruition whilst also providing investors with attractive returns.

Summary of the Notes

  • Senior Secured
  • Pay a fixed 6.00% per annum coupon paid quarterly
  • 4 year scheduled maturity to November 2025
  • Structural enhancements in the form of portfolio parameters, buy out obligation and first loss provided by Zagga

FIIG is very pleased to have supported the well credentialed team at Zagga in this further issue. For enquiries about this and the other primary market opportunities that FIIG makes available to its clients please get in touch with your Relationship Manager.

Zagga CEO Testimonial

Zagga is very pleased to have raised a $13 million tap issue on its 6% ZILT 7 Corporate Note, of which the initial $30m was raised in November last year, bringing the full raise to date to $43m. Zagga is enormously proud of this milestone achievement in its almost five-year corporate life to date, and acknowledges the input, effort, experience, guidance and stewardship of the FIIG team in bringing this initiative successfully to fruition.

FIIG’s team is highly-skilled, hugely experienced, commercial yet detail oriented, and clearly expert in the DCM arena. Their lead arrangement of the corporate note issue, both initially and for this latest tap issue, from inception to close was entirely professional, directed towards achieving the best outcome for Zagga, and expertly managed. As with all transactions of this nature, but more so under current economic circumstances, there were bumps along the way. FIIG’s communication with the Zagga team and the various third-parties involved was transparent, relevant and effective and ensured that any issues were identified early, considered carefully, and plans put in place to mitigate or respond as most relevant.

The Zagga and FIIG teams co-operated closely and effectively and, I believe, developed a solid mutual respect which bodes well for any future raises which Zagga undertakes with FIIG. We are certainly very pleased with the relationship.

- Alan Greenstein, Zagga CEO