The Serko Ltd (ASX: SKO) share price has bolted more than 38% in early trade after successfully completing a share placement.
What did Serko announce?
Earlier today Serko announced the successful completion of a full subscribed placement after attracting bids from 25 institutional investors across New Zealand and Australia.
The NZ$56 million placement involved a NZ$40 million primary issue and a NZ$16 sell down by directors of existing shares at a fixed price of NZ$4.04, a 4.9% premium on Serko’s NZ$3.85 closing price on the New Zealand Stock Exchange. As part of the placement, Booking Holdings Inc acquired a NZ$17.5 million (approximately 4.7%) investment in Serko.
Serko CEO Darren Grafton said “The capital raising provides Serko with an exciting opportunity to accelerate the global rollout of Serko Zeno and expand marketplace content.”
The new shares issued under the placement will rank equally with existing Serko ordinary shares.
Why did Serko raise capital?
Serko is a leading online travel-booking and expense management business duel-listed on the Australian and New Zealand stock exchanges . The company supplies travel and expense software programs used by 6,000 companies, including the likes of Australia and New Zealand Bank Limited (ASX: ANZ), Fortescue Metals Group Limited (ASX: FMG) and KPMG.
Yesterday, Serko announced results for the half-year, outlined plans for the intended capital raising and the Booking.com deal.
In terms of results, Serko increased operating revenue for the 6 months by 29% to NZ$14.7 million, whilst also reporting a 38% increase in recurring revenue to $NZ$13.3 million in comparison to the prior period. According to management “Serko’s revenues continued to grow in its home markets of Australia and New Zealand and good progress was made in establishing its presence in the Northern hemisphere.”
In order to accelerate the roll-out of Serko Zeno into North America and Europe, Serko looked to raise capital by undertaking the NZ$56 million placement and NZ$5 million share purchase plan. Funds from the capital raising will also be used to expand content channels across the global travel management community, increase the company’s scale and ability to grow a customer base.
Areas of investment will include sales and support facilities, product development and integration and expanding the company’s leadership team. The investment by Booking Holdings will also allow Serko to expand its existing agreement and enable Booking.com to offer and promote Serko Zeno to business travellers.
The Serko share price is trading up more than 38% at $4.10 at the time of writing, after reaching a high of $4.14 for the day.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia has recommended Serko 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.