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Pointsbet share price lower after completing institutional placement

The Pointsbet Holdings Ltd (ASX: PBH) share price has returned to trade on Friday and edged lower.

At the time of writing the corporate bookmaker’s shares are down 0.5% to $4.15.

Why was Pointsbet in a trading halt?

Pointsbet requested a trading halt earlier this week whilst it undertook a $122.1 million capital raising.

This morning it announced that it has successfully completed its placement to institutional shareholders and the institutional entitlement component of its 1 for 6 fully underwritten pro rata accelerated renounceable entitlement offer.

This has raised approximately $85.9 million and had strong support from new and existing shareholders. So much so, the placement raised $60 million at $3.60 per share, which is 12.5% higher than the entitlement offer price.

Furthermore, a bookbuild for institutional entitlement offer shortfall shares was conducted yesterday and also attracted strong demand. The final clearing price was $4.00 per share, which represents a premium of 80 cents to the entitlement offer.

It appears as though institutional investors were impressed with the company’s performance in the first quarter.

At the same time as announcing this capital raising, Pointsbet released its first quarter update. That update revealed its turnover jumped 138% over the prior corresponding period to $235.8 million during the quarter. Also rising 138% was PointsBet’s net win, which came in at $11.8 million.

What now?

The company will now push ahead with the retail component of the entitlement offer. This is expected to raise approximately $36.1 million. It will open on November 6 and then close on November 19.

Under the retail entitlement offer, eligible retail shareholders will be able to subscribe for 1 new share for every 6 existing shares held at market close on November 1. This is being offered at $3.20 per new share.

These funds will be used to support market and client acquisition and technology and product development.

They will also be used to support the development of its US business. This includes market access and government licensing fees, sportsbook fit out costs, and balance sheet flexibility.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Pointsbet Holdings 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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