Human resources business 1-Page Ltd (ASX: 1PG) has released further information regarding its capital raising today, although the shares remain in a trading halt, for now.
The company announced that it will issue approximately 11.1 million new shares at $4.50 to institutional investors, raising roughly $50 million. The proceeds will go towards fulfilling the company's growth strategy and potentially funding a strategic acquisition. More on each of these below:
Investment for Growth
As is the case with most technology start-ups, 1-Page is investing heavily in its growth today to better ensure a stronger and more profitable future.
In a presentation to the ASX today, 1-Page said it would invest to "substantially" accelerate the development and commercialisation of its Sourcing, Assessment and Innovation products. That involves plans to triple the number of employees to over 100 by the end of the 2016 calendar year with the focus on a "major expansion of its revenue generating abilities".
Indeed, the company reported revenue of just under $159,000 in the latest half-year period. Given the hype built into the stock, further revenue generation is certainly vital.
Another way the company is striving to improve is by structuring sales teams along industry verticals (e.g. technology, health, travel and entertainment) to best understand the specific customer hiring needs. Indeed, companies would only consider using 1-Page's platforms if they can ensure better hiring results (return on investment) and reduce the costs involved in hiring new talent.
Potential Acquisition
The capital raising will also improve 1-Page's flexibility in negotiating a potential acquisition which the company says would deliver a "world renowned team" in the field of data science, new algorithms to improve its database capabilities, and the potential to significantly shorten 1-Page's product development timeframe.
The transaction isn't expected to close until December 2015, subject to the agreement of satisfactory terms.
Should you buy?
For the sake of full disclosure, I should note that I am a shareholder of 1-Page, not because I wanted to make a quick buck as the stock was soaring, but because I believe the company could play a significant role in the future of human resources. Indeed, the company could even go on to rival the likes of LinkedIn or SEEK Limited (ASX: SEK) if all goes according to plan.
In saying that, I don't believe the shares are cheap, per se. Although they've come off the boil since early September, investors still need to be careful not to speculate and should only invest if they truly believe in the company's future (and are happy to pay the current price).
