Audinate (ASX: AD8) is doing a capital raising to raise up to $40 million to invest for growth and potentially fund acquisitions.
What is Audinate?
Audinate Group Ltd is a provider of digital Audio-Visual (AV) networking technologies. The company’s Dante platform distributes digital audio signals over computer networks, and is designed to bring the benefits of IT networking to the professional AV industry.
Capital raising
Audinate has announced that it’s aiming to raise $28 million in a fully underwritten institutional placement at an offer price of $5.15. This price is a 9.5% discount to the last traded price.
A share purchase plan (SPP) for regular shareholders will also be available – they can invest up to $30,000 into new Audinate shares. The price will either be $5.15 or a 2% discount to the average share price in the five days to the SPP closing date of 11 August 2020.
What will the money be used for?
There are four main areas that Audinate will use the cash to accelerate its growth and strengthen its global leadership position in the AV industry.
The first is to increase its investment in engineering, R&D capabilities and business infrastructure to extend Audinate’s market leading position in the audio networking space.
The second is to strengthen the company’s balance sheet in this uncertain COVID-19 period.
The third is to accelerate investment in additional video and software products.
The fourth is provide financial flexibility to pursue acquisition opportunities.
Summary
Audinate is a quality business with a very strong market position. I’m not sure what the right price to buy Audinate is during COVID-19, but the capital raising price looks cheap enough to buy more shares at. Other growth shares could be even better, if you find them at the right price.
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