Serko Ltd (ASX: SKO) announced today that it will undertake a capital raising and receive support from online travel behemoth Booking Holdings Inc (NASDAQ: BKNG).
Yesterday, Serko ended the day in an ASX trading halt — but not before falling 15%. Then, the ASX put a pause in trading given the unusual movements in the share price.
I speculated that the pause/trading halt would see the company:
- Sell new shares (i.e. a capital raising)
- Make an acquisition
Turns out, there’s a little more to it — and it’ll probably lead to a better outcome.
Booking Holdings Invests In Serko
Perhaps the most interesting takeaway from Serko’s NZX update is news that US-listed online travel company, Booking Holdings, will cornerstone a capital raising and help the company take its Zeno travel and expense software to the global market.
Here are the key takeaways:
- $NZ45 million total capital raising
- $40 million will be issued as a ‘placement’
- Booking Holdings to invest NZ$17.5 million of that amount
- An additional NZ$5 million will be issued to existing shareholders and investors via a Share Purchase Plan (SPP)
- Separately, directors (Simon Botherway and Darrin Grafton) and employees will sell $NZ16 million of stock
The new funds will be used to push Serko’s Zeno product into North America and Europe, and expand its channels to sell to Travel Management Companies (TMCs).
Speaking about Serko’s increased alliance with Booking Holdings, CEO Darrin Grafton said, “Partnering with Booking.com introduces additional content to advance our aspiration of achieving the ‘Unified Traveller Experience’ which will assist corporate travellers with simplicity and compliance while making our resellers more profitable.”
Serko’s Half-Year Results
In addition to the above, Serko released its half-year financial results, showing:
- Operating revenue of $14.7 million, up 29%
- Net loss of $0.8 million, down from a profit of $1 million last year
- Cash on hand at September 30, 2019, was $10.3 million, down from $15.7 million as at March 2019
- Cash burn is expected to continue
Looking forward, Serko Chair Simon Botherway said, “We made pleasing progress in the first half of FY20 and we continue to be the leading online business travel booking platform in the Australasian market.”
“We have invested heavily in the Zeno platform for expansion into the North American markets during the period.”
Adding, “Serko retains its revenue guidance within the range of 20-40% Operating Revenue growth for the full financial year ending 31 March 2020. As previously advised to the market, currency fluctuations and the timing of customer onboarding will be key factors in determining the final result.”
Serko shares are expected to emerge from their trading halt upon the successful completion of the share placement.
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Disclosure: At the time of publishing, Owen does not have a financial interest in any of the companies mentioned.
