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Nearmap (ASX:NEA) share price halted for $90 million capital raising

money loading, invest, boost earnings

The Nearmap Ltd (ASX: NEA) share price won’t be taking part in the tech rebound on Thursday after it requested a trading halt.

Why is the Nearmap share price in a trading halt?

This morning Nearmap requested a trading halt whilst it undertakes a capital raising.

According to the release, the company has launched a fully underwritten institutional placement to raise a minimum of $70 million and a non-underwritten share purchase plan aiming to raise a further $20 million.

The pricing of the placement will be determined via an institutional bookbuild with an underwritten floor price of $2.69 per new share. This represents a 6.9% discount to its last close price.

Whereas the share purchase plan will be undertaken at the lower of the placement price and a 2.5% discount to its five-day volume weighted average price at the closing date.

Why is Nearmap raising funds?

Management advised that it is raising the funds to capitalise on the momentum of the business and the tailwinds in the industry.

The proceeds of its capital raising will be deployed across a number of areas of investment. These include scaling its investment in sales and marketing, particularly in North America.

It also intends to expand its product solutions to high-value use cases, which it believes will provide greater engagement and utility to customers.

In addition to this, funds will be used to accelerate the roll out of the HyperCamera3 systems. This will generate expanded coverage at higher fidelity and enable the expansion into new geographical markets.

“Significant opportunity”

CEO and Managing Director, Dr Rob Newman, commented: “Nearmap has continued to scale rapidly over a short period of time and saw particularly strong ACV growth from three core industry verticals in FY20. The Roofing, Insurance and Government verticals have benefited from the increasing attractiveness of our premium content types and we see a significant opportunity for Nearmap to establish a leadership position in each.”

These verticals accounted for 70% of its North American ACV portfolio at the end of FY 2020.

“With our unique technology and subscription business model which no other aerial imagery company has been able to replicate at scale and with the acceleration of investments into strategic growth initiatives, Nearmap continues to focus on the global opportunity to become the world’s leading provider of subscription-based location intelligence.”

Concurrent with the placement, the company non-executive director Ross Norgard is offloading approximately 4.2 million shares. This represents 15.1% of his holding and will leave the director with a relevant interest of 23.6 million shares.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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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