The IOUpay Ltd (ASX: IOU) share price has returned from its trading halt and is charging higher.
The Malaysia-based buy now pay later (BNPL) provider's shares were up as much as 14% to 80 cents at one stage.
However, the IOUpay share price has now pulled back notably from there and is currently up 3.5% to 72.5 cents.
Why is the IOUpay share price charging higher today?
This morning IOUpay returned from its trading halt following the successful completion of a $50 million placement to sophisticated and institutional investors.
According to the release, 100 million shares were offered to investors at 50 cents per share. This represents a 28.6% discount to its last close price of 70 cents.
Management advised that the placement received strong investor demand far exceeding the placement limit agreed by the company. It also secured strong support from new and existing sophisticated, local and international institutional investors.
To put this placement into context, at the start of 2021 IOUpay had a market capitalisation of $74 million. This is based on an IOUpay share price of 19.5 cents and its shares outstanding of ~380 million.
This means that through this placement the company has raised over two-thirds of its market capitalisation from just six weeks ago.
Why is IOUpay raising funds?
Management advised that the proceeds will be used for growth initiatives including digital payments and to accelerate new business development opportunities in the BNPL sector in South East Asia. Funds will also be used for working capital purposes.
IOUpay Chairman, Aaron Lee, commented: "The Company is delighted to see the market respond so strongly to our plans to accelerate our market position as a leading operator in the digital payments and BNPL sectors in South East Asia."
"This capital raising represents another important milestone in our roadmap to expand our existing and new product offerings and accelerate the growth potential of that expansion. We welcome all new shareholders and thank our existing shareholders for their continued support for this exciting new next chapter of IOU which combined with existing cash reserves provides us with a strong capital platform to execute our market validated business plan," he concluded.