The Credit Corp Group Limited (ASX: CCP) share price has returned from its trading halt and dropped lower in morning trade.
At the time of writing the receivables management company's shares are down 5% to $21.00.
Why was Credit Corp in a trading halt?
On Monday Credit Corp placed its shares into a trading halt following the release of a market update and the announcement of an institutional placement.
In respect to the market update, Credit Corp upgraded its full year guidance for purchase debt ledger acquisitions by $5 million to between $200 million and $215 million and net lending by $5 million to between $55 million and $60 million.
It held firm with its net profit after tax guidance of $69 million to $70 million and earnings per share guidance of 144 cents per share to 146 cents per share.
Institutional Placement.
This morning the company announced the successful completion of its institutional placement.
As a result of significant demand from new and existing institutional investors, the company increased the size of the placement from $100 million to $125 million.
These funds, which were raised at a discount of $20.45 per share, will be used for debt purchases in Australia, New Zealand, and the United States, and to provide balance sheet flexibility. The latter will allow the company to seize on future debt buying opportunities.
Credit Corp's CEO, Mr Thomas Beregi, appeared to be very pleased with the placement.
He said: "We are pleased with the successful outcome of the Placement and the support shown from new and existing shareholders. The additional proceeds provide us with further capacity to support the Group's key strategic initiatives, and increase funding flexibility. We are enthusiastic about the outlook for our business both in Australia and the United States."
An additional $10 million is now expected to be raised via a share purchase plan.
Should you invest?
Based on its guidance, Credit Corp's shares are changing hands at approximately 14.5x forward earnings. I think this is good value and makes it well worth considering an investment in its shares along with sector peers Money3 Corporation Limited (ASX: MNY) and even FlexiGroup Limited (ASX: FXL).
However, it may be best to wait for the dust to settle on its placement before making a move as some investors may look to make a quick profit on their new shares.
