The Bravura Solutions Ltd (ASX: BVS) share price won’t be going anywhere today after the fintech company requested a trading halt.
Why are Bravura Solutions shares in a trading halt?
This morning Bravura Solutions requested a trading halt whilst it undertook a $165 million fully underwritten institutional placement.
According to the release, the placement has been undertaken in order “to enhance balance sheet flexibility, increasing the capacity for strategic acquisitions, including the proposed acquisition of GBST, and to drive growth in existing geographies and into new geographies and markets.”
The placement has been fully underwritten by Macquarie Group Ltd (ASX: MQG) subsidiary Macquarie Capital and aims to raise $165 million at a floor price of $5.50 per share. This represents a discount of 11.9% compared to Bravura’s last close price of $6.24.
What growth opportunities does the company have?
As mentioned above, the company intends to use some of the proceeds to drive growth in existing geographies and into new geographies and markets.
Management advised that these include “a number of adjacent geographic markets that are currently demonstrating (or are likely to demonstrate in the near term) characteristics similar to the ones in which Bravura currently operates, such as an increasingly sophisticated financial services economy, more complex financial products, and increasingly complex financial services regulation.”
The company may pursue these opportunities through acquisitions, development co-funding with an existing client who wishes to enter a new market, or with further research and development investment.
A prime example of this is the company’s recent takeover approach of GBST Holdings Limited (ASX: GBT). Management believes this would create synergies and client value creation opportunities and expects it to be EPS accretive in the first full year of ownership.
Should you invest?
I continue to believe that Bravura Solutions is one of the best tech shares on the Australian share market and a great buy and hold option.
However, when a company raises capital at a discount it often weighs on its shares for a little while, so it might be worth sitting tight and seeing if the placement creates an opportunity to buy shares at a cheaper price when they return to trade.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. 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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