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