Why you need to watch the Corporate Travel (ASX:CTD) share price today

The Corporate Travel share price is one to watch after completing its institutional capital raising today. We take a closer look.

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The Corporate Travel Management Ltd (ASX: CTD) share price is back on the market today and could be on the move.

What’s been happening in recent days?

Corporate Travel shares haven’t traded since last Friday ahead of an equity capital raising.

The Aussie travel group has successfully raised $262 million via an Institutional Entitlement Offer at $13.85 per share with 90% take-up.

That represents a 14.3% discount to the $16.16 that the Corporate Travel share price closed at on Friday. The travel share will be worth watching as investors process the discount against current valuations.

The funds will be put to work as Corporate Travel announced its latest acquisition. The travel group is set to purchase Omaha, USA-based corporate travel business, Travel & Transport (T&T).

Corporate Travel’s latest target posted calendar-year 2019 total transaction value of US$2.8 billion. The funds raised in recent days will be used for the acquisition, integration of the company and to provide balance sheet flexibility.

What does this mean for the Corporate Travel share price?

Time will tell if the acquisition is a good one for Corporate Travel. The group already has strong offshore earnings and the T&T acquisition could boost this.

But I think it also represents an important turning point. It’s not long ago that the Corporate Travel share price was down 60% to 70% for the year.

However, things change quickly during a global pandemic. CEO Jamie Pherous has declared that Corporate Travel has gone from the hunted to the hunter.

The Aussie travel group believes it has the strength to see out the coronavirus pandemic. The company has now turned its attention to acquisition opportunities with fresh capital.

To me, that confidence is a good sign. Shareholders don’t always love acquisitions but they do like certainty.

If Corporate Travel can continue to execute its strategy with a focus on balance sheet management, I think 2021 could be a good year.

Foolish takeaway

Corporate Travel has shown it is capable of balancing risk and reward in 2020. The company also provided a trading update yesterday and flagged lower earnings in August and July.

I think the Corporate Travel share price will be on the move in early trade as investors process the news.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. 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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