The WiseTech Global Ltd (ASX: WTC) share price has pushed higher this morning after the logistics platform provider announced a major investment from an institutional investor.
At the time of writing the WiseTech Global share price is up 1.5% to $14.02, bringing its 12-month return to over 96%.
What was the investment?
According to the release, WiseTech Global has issued approximately $100 million worth of shares to a single global institutional investor.
Capital Group’s SmallCap World Fund has picked up 7,560,153 ordinary shares at a price of $13.30 per share.
WiseTech Global Founder and CEO, Richard White, believes that the issue will support the company’s future growth.
He stated that: “The funds will be utilised in the continued disciplined execution of our stated strategy. Through this single transaction, we add further strength to our balance sheet and increase the capacity at which we can accelerate our long-term growth.”
While issuing these shares will of course be dilutive to existing shareholders, I think the $100 million war chest it provides could add significant value to the company in the medium to long term.
Because of this, I think the share issue is a big positive. Further, I feel that it lends considerable support to its current share price. After all, if Capital Group was willing to put $100 million in at $13.30, the institutional investor is clearly optimistic that the share price will be notably higher in the future.
Should you invest?
I think WiseTech Global is one of the best tech shares on the Australian share market alongside the likes of Altium Limited (ASX: ALU) and Nextdc Ltd (ASX: NXT). And while I would prefer to buy in at a cheaper price, there’s no guarantee that one will be forthcoming in the future.
This could make it worth considering a small position in the company before it gets too late.
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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of Altium and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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