Splitit (ASX:SPT) shares enter trading halt as it prepares to raise capital

The Splitit Ltd (ASX: SPT) share price won’t be going anywhere on Monday after shares in the buy now, pay later provider entered a trading halt. 

In an ASX announcement released before the market opened this morning, Splitit requested a two-day halt as it seeks to undertake a capital raising.

While the company is yet to reveal details of the raising, The Australian Financial Review has shed some light on the matter. 

According to the AFR, Splitit and its broker Canaccord Genuity were shoring up investor support for an equity raising on Monday morning. Fund managers have reportedly said they expect a raising worth around $50 million.

The deal comes just days after Splitit released an update for the second quarter of FY20. On Thursday last week, the company revealed record growth in Q2, with merchant sales volume of US$65.4 million contributing to underlying gross revenue of US$2.4 million. This represented growth of 260% and 460%, respectively, compared to the corresponding period in FY19.

Now what?

This will be Splitit’s second capital raising for 2020. Back in May, the company raised $16 million by issuing around 39 million new shares to institutional, sophisticated and professional investors. 

While the May raising was completed at a placement price of just 41 cents, investors won’t be as lucky this time around. A partnership with Mastercard put a rocket under the Splitit share price in June, with shares last closing at $1.365 on Friday.

Splitit will be the third BNPL share on the ASX to take advantage of all-time high share prices after rivals Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL) launched respective raisings last month. In July, market darling Afterpay completed a $650 million institutional placement, while Sezzle raised $79 million from institutional investors.

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Disclosure: At the time of publishing, Cathryn owns shares of Afterpay.

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