JWCA advises Zscaler on its $1.725 billion zero-coupon convertible and capped call
june 2025 | read press release
Transaction Background
Zscaler, Inc. (“Zscaler” or the “Company”) successfully raised $1.725bn (inclusive of greenshoe) in the convertible market at highly attractive terms (0.00% coupon and 40.0% conversion premium)
Zscaler took advantage of strong underlying convertible market conditions and meaningful momentum in its stock price to successfully execute its convertible bond issuance
The Company sought to protect against future equity dilution with a 3-year maturity and a capped call with an +150% upper strike
Zscaler opportunistically raised capital at a very low cost of capital after achieving a 3-year stock price high on the Nasdaq the day prior to execution
The Company engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction
JWCA provided extensive analysis on deal structuring and related items, including:
Convertible and derivative overlay structuring, accounting analysis and tax implications, syndicate structure and precedent data
Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the company
Execution timing and shareholder messaging
JWCA designed and ran a capped call auction process to achieve competitive terms
JWCA provided advice, support and analysis throughout the execution processss
Results
Zscaler’s convertible transaction was very well received by investors:
The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering
The 0.00% coupon and 40.0% conversion premium represented the company-friendly end of both the marketed coupon and conversion premium ranges
The +150% capped call cap premium represents the highest ever upper strike percentage achieved by a three-year convertible issuer
Capped call documentation and auction process produced meaningful savings for Zscaler, driving economics in the Company's favor
This is JWCA’s second advisory assignment for the Company after advising Zscaler on its inaugural convertible issuance in June 2020