The financial services firm, DailyPay, which provides on-demand pay and financial health solutions, has executed a USD 200 million asset-backed securitisation (ABS) of its receivables.
Asset-backed securitisation involves pooling illiquid assets like loans into marketable securities for sale to investors. These securities are backed by the cash flows from underlying assets.
This action forms a new financial class and enhances DailyPay’s capacity to collaborate with employers to end the traditional two-week pay cycle. Through partnerships with DailyPay, employers can improve their engagement with employees, allowing them flexible access to pay on their own schedule.
Ending the Paycheck-to-Paycheck Cycle
This securitisation responds to high investor interest, highlighting the advantages of a novel approach to providing on-demand pay. With USD 25 billion in payment volume, DailyPay is exploring ways to refine its capital structure and advance its growth objectives.
DailyPay enables employers to grant their employees instant access to wages without disrupting cash flow management or payroll operations. According to recent research by DailyPay, more than half of Americans are living paycheck-to-paycheck due to increasing inflation, leading to diminished consumer confidence. The company believes that individuals should have the freedom to earn and access their pay as they go, and a financial system tailored to meet their needs. DailyPay’s new financing position will help support both clients and employees.
Adding this USD 200 million securitisation, DailyPay has now secured nearly USD 1 billion in debt financing supported by its on-demand receivables, including an earlier secured debt facility of USD 760 million with Barclays, Citi, and TPG Angelo Gordon.
The offering comprised four classes of notes: A, B, C, and D. Ratings from Morningstar DBRP were AA (sf) to BB (sf). Barclays served as the lead bookrunner and structuring agent, while Citi and Morgan Stanley acted as joint bookrunners. Latham & Watkins LLP provided legal advice to DailyPay, and Mayer Brown LLP advised on behalf of the bookrunners.
