WiseTech Global Ltd (ASX: WTC) shares have gone into a trading halt with the company announcing a large capital raising.
WiseTech Global was founded in 1994 by Richard White to provide software to the logistics sector. Since then it has grown to become a global provider of logistics software, claiming to service 19 of the top 20 logistics companies globally. WiseTech makes money by charging its customers on a ‘per use’ basis rather than as a subscription model. Meaning, WiseTech directly benefits as its customers grow their businesses.
Why have WiseTech shares gone into a trading halt?
WiseTech shares have gone into a trading halt because the software business has announced a $250 million fully underwritten institutional capital raising. This will be followed by a share purchase plan for regular investors.
Management said that the global logistics industry opportunity available to the company is vast, so the company plans to use the funds to execute on the company’s growth strategy.
WiseTech has made a number of acquisitions over the past few years in different countries which, according to WiseTech, provides safer, faster and stronger entry to key markets across G20 + 20 countries, which is where 90% of the world’s manufactured trade goes.
The company boasts of having secured key positions in all major English-speaking economies, major European economies and Latin American economies. WiseTech is going to keep targeting European economies and other markets in Asia. Once this strategy is complete, the company expects to be the global leader in customs clearance and border compliance.”
WiseTech Global Founder and CEO Richard White commented on the idea behind the capital raising, “We add further strength to our balance sheet and increase the capacity at which we can accelerate our long-term organic growth”.
Is this good news for WiseTech?
Raising at least $250 million at share price of between $20.30 to $21.50 would appear to be good news for WiseTech, as it allows the company to continue its global expansion plans.
However, if I were a shareholder I’m not sure I would be taking part in this raising because the share price looks expensive compared to its current level of earnings. I believe there are better opportunities on the ASX at better valuations.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).