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UPDATE 2-Australia's Zip snaps up 'buy now, pay later' firms in Europe, Middle East

* To spend $123.7 mln to buy out Twisto and Spotii

* Zip in April flagged plans to expand into Asia

* Company had raised an extra A$400 million in April (Adds background, details on recent capital raise)

May 24 (Reuters) - Australia’s Zip Co Ltd said on Monday it fully acquired a buy-now-pay-later (BNPL) company each in Europe and the Middle East for a total of A$160 million ($123.65 million) as it looks to expand its global presence in a rapidly growing industry.

The deals come about five months after Australia’s No.2 BNPL player raised money to buy stakes in Czech Republic-based Twisto and the United Arab Emirates-based Spotii.

A surge in online shopping during the COVID-19 pandemic and the growing appetite for instalment payments have led BNPL firms to explore newer markets to stay ahead of each other as well as traditional financial firms such as PayPal Holdings.

Zip in April raised an extra A$400 million, and announced its entry into Canada and expansion in Asia, where larger rival Afterpay is gearing up for a launch.

Zip will pay A$140 million to take full ownership of Twisto, offering the Australian fintech access to other markets in Europe.

Twisto is about one-tenth the size of Afterpay in Britain, according to RBC Capital Markets, which sees the deal as a “stepping-stone into a large European market” where some countries are “experiencing high uptake of BNPL-style products.”

The Eastern European company has had more than 1 million customers on its platform as of April and an annual sales run rate of A$230 million, Zip said.

For Spotii, Zip will spend A$21 million for the rest of the stake that it does not own in the company, which was founded last year and operates in Saudi Arabia and the UAE. The deal is expected to be completed in the third quarter.

“There is a large untapped opportunity to bring BNPL to emerging markets where cash on delivery remains a significant merchant challenge, and where the digitisation of retail accelerates,” Larry Diamond, Zip co-founder and chief executive, said.

Zip outperformed its BNPL peers that were in the red, closing 0.9% higher at A$7.1.

$1 = 1.2940 Australian dollars Reporting by Soumyajit Saha and Nikhil Kurian Nainan in Bengaluru; Editing by Uttaresh.V and Arun Koyyur

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