Serko Limited (ASX: SKO), an online travel booking and expense management business, is raising up to NZ$55 million.
What’s going on?
Serko said it’s raising up to NZ$55 million to “accelerate and execute on the opportunities arising from a changing business travel market.”
Serko plans to raise NZ$45 million in a fully underwritten placement. It also plans to raise NZ$10 million in an non-underwritten share purchase plan.
The NZ business has NZ$33.6 million of cash on the balance sheet, but the timing of meaningful revenue generation is “uncertain”. So Serko is being prudent by raising capital now in this COVID-19 environment.
Serko is still confident about its growth prospects over the medium to long term. It’s also confident about the recovery of business travel over time.
Serko CEO Darrin Grafton said: “The COVID-19 pandemic is creating opportunities for us to accelerate the development and rollout of our technology to support our travel management company (TMC) and reseller partners.
“In recent months, we have received inbound demand from these organisations as they consider, plan and request accelerated timetables to onboard new customers, deliver new features and expand existing partnerships. This demand has exceeded our expectations and is highlighting increased opportunities from a changing travel industry.”
Raising details
The NZ$45 million placement is under written at a floor price of NZ$4.35, which is a 3.5% discount to the last closing price.
Existing retail/regular shareholders can buy up to NZ$50,000, or A$46,500, of new Serko shares. Investors can start buying shares from 7 October 2020.
Summary
I think it’s better to raise money at a higher share price, when the need isn’t urgent. The Serko share price has risen 330% since 24 March 2020. Is it worth buying? I’m not sure, it depends how strongly the travel market rebounds, which is unknown.
For ASX growth shares, I’d rather buy one of the ASX tech shares I just wrote about like Pushpay Holdings Ltd (ASX: PPH).
