The Audinate Group Ltd (ASX: AD8) share price is tumbling this morning in response to the company’s $40 million capital raising. At the time of writing, Audinate shares have fallen 6.2%, last changing hands at a price of $5.34.
Audinate operates in the digital audio-visual (AV) networking space. Its flagship Dante platform replaces point-to-point audio and video connections with scalable and flexible networking.
There are nearly 300 original equipment manufacturers, including the likes of Yamaha, Bose and Sony, shipping Dante-enabled products. As a result, more than 2,800 Dante-enabled products are available on the market, which is around 8 times that of the closest competitor.
Oversubscribed institutional placement
This morning, Audinate announced the successful completion of the institutional component of its capital raising. The company has raised $28 million in an oversubscribed institutional placement at an issue price of $5.15. This represents a 9.5% discount to Audinate’s last closing price of $5.69.
Audinate co-founder and CEO Aidan Williams said: “We would like to thank our existing shareholders for their ongoing support and we welcome new shareholders to our register. Following the Equity Raising, Audinate will be well-positioned to weather further potential COVID-19 impacts, accelerate its growth plans and deliver on its medium-term strategic priorities.”
Featured video: SaaS valuation explained
What will the funds be used for?
Proceeds from the equity raising will be used to accelerate Audinate’s growth opportunities, and strengthen its global leadership position in the AV-industry.
Specifically, the funds will be used to:
- Increase investment in engineering, R&D capabilities and business infrastructure to extend Audinate’s market-leading position in the audio networking space;
- Strengthen the company’s balance sheet position;
- Accelerate investment in additional video and software products; and
- Provide flexibility to pursue potential M&A opportunities that complement the company’s medium-term objectives.
Now what?
Audinate shareholders now have a chance to participate in a share purchase plan (SPP), which will raise up to $12 million. Shareholders will have the opportunity to acquire up to $30,000 new shares between 29 July and 11 August 2020. The price of the SPP 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.
On the whole, this is an interesting move from a company that had $29.3 million cash on hand and no debt on its balance sheet as at 30 June 2020. It appears as though Audinate sees significant opportunity to strengthen its leading position in the current market and is doubling down.
If you’re interested in the ASX growth space, here’s what’s been making headlines.
[ls_content_block id=”14947″ para=”paragraphs”]
