Brisbane-based network-as-a-service provider Megaport plans to raise $50 million in new equity via a placement to institutions, sophisticated and professional investors (Placement) and up to $10 million via a Share Purchase Plan (Capital Raising).
Megaport is undertaking the Capital Raising to expand its capability to deliver connectivity to a broader customer base outside of the current footprint, including via its new Cloud Router service, and to consolidate its first-mover advantage.
It will use the funds to upgrade network capacity, accelerate expansion to new locations and markets, and fund staffing, marketing and operating costs and general working capital requirements.
Megaport will issue 13,333,334 fully paid ordinary shares under the Placement at an issue price of $3.75 per share, raising approximately $50 million. The issue price represents a 7.4% discount to the closing price on 19 March 2018 of $4.05 per share, being the last trading day before Megaport announced the Placement.
The firm noted "very strong interest" in the Placement from US institutional investors, with commitments from three cornerstone investors who have agreed to subscribe for over $50 million of shares at $3.75 per share.
"Enabling our software-defined network in more markets that are currently underserved by cloud connectivity is critical to maximizing our first-mover advantage," said Megaport CEO Vincent English.
“This Capital Raising will enable [us] to support these strategic initiatives and fuel the connectivity services driving tomorrow’s IT architectures."
“To help facilitate the broadening of our international institutional base and to assist with liquidity, concurrent with the Placement, our Chairman, founder and major shareholder Mr Bevan Slattery, has agreed to offer 6,666,667 shares to institutions, sophisticated and professional investors via a secondary offering (Secondary Offering)," said English. "At the conclusion of Placement and Secondary Offering, Bevan will hold a relevant interest in 23.0% of Megaport shares."
The Secondary Offering shares will be sold at the same price as the Placement shares.