Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

$90 million Nearmap (ASX:NEA) capital raising – time to buy?

Nearmap Ltd (ASX: NEA) is doing a capital raising for a total of $90 million to fund growth.

Nearmap is an aerial imaging business that operates in both the US and in Australia.

Nearmap’s capital raising

In April 2020 the company explained to investors that “cost management initiatives were being prudently deployed to preserve cash, maintain a strong balance sheet, and maximise flexibility for the future without the need for additional capital.”

However, today Nearmap has announced the launch of a capital raising for up to $90 million.

It comprises at least $70 million in an institutional placement and another $20 million in a non-underwritten share purchase plan (SPP).

Nearmap reminded investors that in the FY20 result it reported “strong growth momentum” with closing FY20 annual contract value (ACV) of $106.4 million and statutory revenue of $96.7 million.

The aerial imaging business said that it’s undertaking the capital raising to accelerate its growth opportunities.

There will be four areas that the money is deployed in:

Nearmap plans to achieve deeper penetration into strategic growth industry verticals through increased investment in sales and marketing, particularly in North America. It’s also expanding its product solutions to high value use cases, which will provide greater engagement and utility to customers.

The second focus is accelerating the roll-out of its HyperCamera 3 systems, which will generate expanded coverage with better images and enable expansion into new geographical markets.

The third focus is investing in the operational systems and data to support rapid scaling.

The final reason for the capital raising is that it will allow flexibility to pursue other growth initiatives and respond to opportunities while continuing to take a disciplined approach to cash management.

Raising details

The $70 million placement will represent 5.7% of the company’s existing shares.

Pricing will be determined through an institutional bookbuild with an underwritten floor price of $2.69 (a 6.9% discount to the last closing price). The bookbuild price cap is $2.77 with a maximum raising of $72.1 million.

Regular shareholders will be able to buy up to $30,000 of shares when the offer opens on 17 September 2020.

Director selldown

Non-executive director Ross Norgard is also going to sell 4.2 million shares, being around 15.1% of his holding. This will take his holding to below 5%. This director selldown is fully underwritten. He remains committed to the business.

Summary

Including the placement cash, Nearmap would have at least $105 million cash at 31 August 2020.

I can understand that Nearmap wants to aggressively pursue growth and it’s a good price to do it considering how strongly the price has recovered since the COVID-19 crash.

It was possible to buy Nearmap shares at a lower price in the first half of August, so it doesn’t strike me as an opportunistic time to take part in the raising – but a discount is attractive if you like Nearmap’s long term potential.

Nearmap isn’t on my watchlist, I prefer other ASX growth shares like Pushpay Holdings Ltd (ASX: PPH) which are also expanding overseas but don’t need to keep taking investors for money.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content