The NEXTDC Ltd (ASX: NXT) share price is one of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Friday.
This morning the the data centre operator's shares returned from their trading halt and rocketed higher.
In early trade NEXTDC's shares are up a sizeable 13% to a record high of $10.40.
Why is the NEXTDC share price rocketing higher today?
Investors have been buying the company's shares after it announced the successful completion of its fully underwritten institutional placement to raise $672 million. These funds were raised at $7.80 per new share. This represents a 9.4% discount to the 5-day VWAP and a 15% discount to its last close price.
Unlike other companies such as IDP Education Ltd (ASX: IEL) and Webjet Limited (ASX: WEB) that have raised funds this week to see them through the coronavirus crisis, NEXTDC was raising funds to meet the increasing demand for its services.
On Thursday the company explained that it was raising the funds to support its growth agenda. This includes the proposed development of a new data centre in Sydney, together with the balance sheet flexibility required to accelerate and expand a range of growth initiatives in line with recent and expected material customer contract wins.
$350 million of the proceeds will go towards its initial investment in a third Sydney data centre, named S3. This includes 12MW of upfront capacity. A further $307 million will be spent on growth driven initiatives, including capacity requirements and development opportunities. The remaining $15 million will be used for transaction costs.
Significant growth.
The company's managing director and chief executive officer, Craig Scroggie, was very pleased with the support the placement received.
He said: "Achieving such a comprehensive take-up of the Placement in the current market environment again serves to reinforce the strength of investor support for NEXTDC. We continue to see significant growth in underlying demand for cloud services, with the success of this Placement ensuring NEXTDC does not lose critical momentum in pursuing growth opportunities."
NEXTDC will now push on with its share purchase plan. Eligible shareholders will have the opportunity to apply for $30,000 of new shares under a non-underwritten, uncapped share purchase plan.
The share purchase plan issue price will be the lower of the placement price or the 5-day VWAP up to and including the closing date of April 30. To be eligible you needed to be on the share registry on April 1 at 7pm.
