DailyPay, a provider of on-demand pay and financial health solutions, has completed a USD 200 million asset-backed securitisation (ABS) of its receivables.
ABS is the process of taking illiquid assets, such as loans, and packaging them into marketable securities that can be sold to investors. These securities are backed by cash flows generated from the underlying assets.
This move establishes a new asset class and strengthens the company’s ability to partner with employers to discontinue the traditional two-week pay cycle. Partnering with DailyPay allows employers to optimise their connection with their employees, offering them pay on their own schedule.
Breaking the paycheck-to-paycheck cycle
The securitisation follows significant investor demand, reflecting the benefits of taking a different approach to on-demand pay. With USD 25 billion in payments volume, DailyPay is seeking new ways to optimise its capital structure and support its growth goals.
The company enables employers to offer on-demand access to pay with no impact on their cash flow management or payroll processes. In a recent study, over 50% of Americans reported living paycheck-to-paycheck due to rising inflation, which makes consumer confidence decrease, according to DailyPay. The company believes that individuals deserve access to their pay as they earn it and a financial system that works for them. DailyPay’s new capital position allows the company to help their clients and their employees.
With the addition of the USD 200 million securitisation, DailyPay secured almost USD 1 billion in debt financing backed by its on-demand receivables, including its already existing USD 760 million secured debt facility with Barclays, Citi, and TPG Angelo Gordon.
The offering included four classes of notes, A, B, C, and D, rated by Morningstar DBRP. The credit ratings agency assigned ratings from AA (sf) to BB (sf), respectively. Barclays was the lead bookrunner and structuring agent, with Citi and Morgan Stanley as joint bookrunners. Latham & Watkins LLP advised DailyPay, and Mayer Brown LLP advised the bookrunners.
