Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Zip expands into India
The Zip Co Ltd (ASX: Z1P) share price is rising after it announced it is entering the Indian buy-now, pay-later (BNPL) market.
Zip invests in Indian BNPL business
Zip announced that it is making an investment in leading Indian BNPL company ZestMoney.
ZestMoney is the largest fully automated, AI-driven BNPL platform in India. It has 11 million registered users and over 10,000 online merchants including Amazon, Flipkart and Apple. It also has a presence in 75,000 physical store locations.
Details of the deal
Zip said that it will acquire a minority shareholding in Zestmoney with a US$50 million ($68.5 million) investment, with the ability to increase its shareholding over time.
Part of the deal includes a board seat, and that “specific reserved matters” require Zip approval.
Zip said that it had $461.6 million in cash and cash equivalents at 30 June 2021 and remains well-funded to support its global operations.
Why the Indian market is exciting for Zip
Zip said that India has the potential to become one of the largest markets globally. By FY26 India is forecast to have US$300 billion ($411 billion) in BNPL volume. This could be helpful for the Zip share price over time.
This growth is expected to be driven by changing consumer spending trends and population age demographics shifting.
Less than 10% of India’s population, around 100 million shoppers, currently utilizes online shopping and this is expected to grow to 220 million online shoppers in 2025.
The Zip growth strategy
Management said that this forms part of Zip’s “disciplined global investment strategy”. This particular investment in ZestMoney follows a similar strategy that was successful in the US with Quadpay.
Final thoughts on Zip and the share price
Time will tell how much profit it will make from India but growing its global presence is what will likely drive the Zip share price in the medium term.
However, it is hard to say if Zip shares are currently good value because of the level of strong competition and limited profit in the BNPL sector.
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