The Splitit Ltd (ASX: SPT) share price has returned from its trading halt and zoomed higher this morning.
In early trade the buy now pay later provider’s shares were up as much as 20% to $1.64.
Why was the Splitit share price in a trading halt?
The Afterpay Ltd (ASX: APT) rival requested a trading halt on Monday while it launched an equity raising.
This morning Splitit announced that it has received firm commitments to raise $90 million (before costs) in new equity. These funds will be raised via a fully committed two-tranche share placement to institutional, sophisticated, and professional investors.
This will be through the issue of approximately 69.2 million new shares at a price of $1.30 per share. This represents a discount of 4.8% to Splitit’s last close price.
Management advised that the placement was well supported by existing shareholders and will see a number of new, high quality institutions join the company’s register.
This includes cornerstone investor, Woodson Capital Management, as a substantial shareholder. Woodson Capital manages a global consumer and technology investment fund headquartered in New York and launched in 2010 with seed backing from Tiger Management.
What about retail shareholders?
The company also intends to launch a non-underwritten share purchase plan following the issue of the first tranche of the placement shares.
This is expected to raise approximately $10 million, which brings the total of the equity raising to $100 million.
What will the funds be used for?
Management advised that the proceeds from the equity raising will be used to accelerate Splitit’s high-growth strategy. This will be through funding additional sales and marketing, and further investing in product and technology development.
Its strengthened balance sheet is also expected to further support growth across the business, including growth of its funded merchant model.
Splitit CEO and Managing Director, Brad Paterson, commented: “We are excited to welcome North American and Global institutional investors to our register. With the business foundations in place and our strategy working well, this equity raising allows us to take things to the next level.”
“We are the only BNPL provider servicing the huge and growing credit card industry and our investors recognise the enormous opportunity to accelerate merchant and customer adoption across our key markets. Our business outlook remains extremely positive, with a healthy pipeline of new merchants and as we work towards activating our strategic partnerships with Visa and Mastercard. We are just getting started and I look forward to building on this positive momentum,” he concluded.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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