Audinate Group Ltd (ASX: AD8) shares have gone into a trading halt as the business announced a capital raising.
Audinate is trying to pioneer the future of AV (audio visual). Its Dante system, which is an audio-over-IP networking solution, is described by the company as a market leader and used across professional live sound, commercial installation, broadcast, public address and recording industries.
Audinate share price
Its goal is to replace traditional analogue audio cables by transmitting synchronised audio signals across large distances, to multiple locations, using an ethernet cable.
Audinate capital raising
It’s undertaking a fully underwritten institutional placement (capital raising) for $50 million at $13 per new Audinate share price.
The ASX tech share is also conducting a non-underwritten share purchase plan (SPP) offer to existing eligible shareholders to raise up to $20 million.
Audinate will have a (pro forma) cash position after the capital raising of approximately $90 million to provide a source of available funding for future strategic opportunities. It has identified some bolt-on acquisition opportunities for its video and cloud strategy.
Eligible regular shareholders will have the chance to buy up to $30,000 of new shares in increments of $1,000 at a price of either $13 or a 2% discount to the average Audinate share price of the five trading days up to the SPP closing date.
What will this money be used for?
Audinate explained that it will deliver “new and innovative products” related to Dante audio installations. That includes internet-of-things (IoT) style device management services (such as Dante Director) and software-based signal processing solutions (such as Dante Connect). It will also build the “operating system for AV”.
But that’s not the only focus of the business with the money, it’s also looking to use some of the money to win in video, which Audinate sees as an important growth opportunity.
It wants to build on its early video success, replicating its success in audio, by driving the execution of its video plan. Audinate wants to accelerate its video product portfolio, such as Dante Connect and a full range of PC/Mac software apps.
Final thoughts on the Audinate share price
The Audinate share price is up almost 50% over the past month – no wonder the company is choosing to raise money at this time. It’s one of the more promising ASX growth shares – there aren’t too many global leaders on the ASX. It’s hard to say if this is a good price to invest at, I’d rather wait for weakness after such a strong recent run.
