The PointsBet Holdings Ltd (ASX: PBH) share price is back from its trading halt and is dropping lower on Wednesday.
At one stage the sports betting company's shares were down as much as 21.5% to $10.73.
They have since recovered a touch but are still down 14% to $11.80 at the time of writing.
Despite this decline, PointsBet's shares are still up a massive 275% since the start of the year.
Why is the PointsBet share price crashing lower?
This morning PointsBet returned from its trading halt following the successful completion of the institutional component of its fully underwritten 1 for 6.5 pro rata accelerated renounceable entitlement offer.
According to the release, the institutional entitlement offer closed on Tuesday and raised gross proceeds of approximately $70.5 million. Approximately 55% of eligible entitlements were taken up by existing shareholders, with the remainder snapped up following a bookbuild of shortfall shares.
The latter attracted strong demand from both existing and new institutional, professional, and sophisticated investors. So much so, the final clearing price under the institutional shortfall bookbuild was $12.50, which represents a premium of $6.00 to the entitlement offer price of $6.50 per share.
PointsBet will now push ahead with the retail component of the entitlement offer and expects to raise approximately $82.7 million.
Combined with its already completed $200 million institutional placement, this will bring the total raised to approximately $353 million.
Why is PointsBet raising funds?
The company is raising these funds largely to support its US marketing activities over the coming years.
PointsBet recently announced a major agreement with NBC Universal which includes a committed marketing spend of US$393.1 million over five years.
Management also plans to use the funds for technology and platform development and US business development. The latter includes market access and government licensing fees and sportsbook fit-out costs.
