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Small-cap ASX payments share jumps 14% on successful capital raise

Smartpay Holdings Ltd (ASX: SMP) shares have stormed out of a trading halt this morning to be up by as much as 14.29% in early trade. The trading halt was put in place on Wednesday, pending the announcement of a capital raising.

Dual-listed on the NZX, Smartpay is a small-cap payments share that has been trading on the ASX since 2013. With a share price of 46 cents at the time of writing, the company’s market capitalisation sits at around $80 million.

Smartpay is an independent full-service EFTPOS provider, directly servicing more than 25,000 merchants with around 35,000 EFTPOS terminals across Australia and New Zealand.

What did Smartpay announce?

Before the market opened this morning, Smartpay revealed it has raised $13 million via a placement to institutional, sophisticated, and professional investors.

Unlike many other ASX shares raising capital at meaningful discounts to their last closing price, Smartpay offered no discount to investors. It completed the raising at an issue price of 42 cents, which was in line with its last closing price on Tuesday.

Smartpay also intends to undertake a share purchase plan for retail investors at the same price of 42 cents, with more details to be announced next week.

According to the company, the funds raised will be used to capitalise the business for growth in both the Australian and New Zealand markets, as well as strengthen its balance sheet through debt reduction.

Commenting on the successful raising, managing director Bradley Gerdis, said:

After having proved up the Australian growth opportunity, as evidenced in our strong revenue growth figures recently released to the market for the year ended 31 March 2020, we are now readying the business to resume and accelerate our Australian growth and to pursue opportunities in the NZ market as we come through the COVID period.

Recent headline results

Earlier this week, Smartpay revealed it had seen a steady recovery in merchant transactions over the past 4 weeks – so much so that aggregate transactional revenue had recovered to 75% of pre-COVID-19 levels.

Prior to this, the company released a trading update in April, informing a 40% decline in aggregate transactional revenues as government restrictions affected the trading conditions of many of Smartpay’s merchants.

With a financial year ending 31 March, Smartpay recently revealed unaudited full-year FY20 revenue of NZ$28.3 million, up 34% from last year’s result of NZ$21.1 million.

The company expects the effects of COVID-19 to further entrench cashless and contactless payments and believes it is well-positioned to benefit from these positive tailwinds.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.