Wisr (ASX:WZR) share price in focus amid $50 million capital raising

How will investors respond when Wisr shares resume trading tomorrow?

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As reported yesterday, the Wisr Ltd (ASX: WZR) share price has gone nowhere this week. This comes after the company’s shares were placed in a trading halt before market open on Monday pending a further announcement regarding a capital raising.

The company has today provided details of the capital raise, with Wisr shares set to resume trading on Wednesday, or after such time the capital raising is completed.

Wisr share price on watch

Wisr shares will be on watch when they resume trading tomorrow after the company advised it’s looking to raise $50 million at 25 cents per share. This represents a 21.9% discount to its last closing price of 32 cents on Friday. The approximately 200 million new shares issued under the placement will represent 18.2% of the company’s existing shares on issue.

A share purchase plan (SPP) will also follow the placement, with eligible shareholders entitled to subscribe to up to $30,000 worth of Wisr shares. The SPP aims to raise approximately $5 million, with the possibility of applications being scaled back at the company’s discretion.

Trading update

Alongside the details of its capital raising, today Wisr also provided an update on its performance in the first two months of 4Q21. The company advised it’s well on track to deliver 20 consecutive quarters of growth, with a loan volume of $77.1 million for the two months ending 31 May 2021. This figure represents a 234% increase compared to the $23.1 million in the prior corresponding period.

Wisr chief executive officer Mr Anthony Nantes commented on the growing momentum behind the company. He said:

It’s fantastic to see the continuation of our loan origination momentum. Our growth to date has us in prime position to aggressively grow market-share, as we scale towards our medium-term target of a $1B loan book. We’re delivering a clear competitive advantage through a superior alternative model that actually improves financial wellness, going far beyond the traditional lending experience to attract Australia’s most creditworthy customers.

Inaugural term deal with AAA-rated top tranche

In further news released today, Wisr advised that its inaugural $225 million asset-backed securities (ABS) transaction, the Wisr Freedom Trust 2021-1, had settled, resulting in a material reduction in its cost of funds.

The Wisr share price previously jumped 7% on 20 May after the company announced a AAA rating for its ABS transaction. The announcement highlighted that global bond credit rating agency Moody’s had rated its top tranche as AAA, signalling the company has a low credit risk and is well-positioned to repay its debt.

Now that the transaction has settled, today’s announcement advised Wisr has an improved capital efficiency with required equity contribution falling to 3.2% from 5.0%.

Mr Nantes also commented on the ABS transaction milestone, saying:

It’s a phenomenal achievement to receive a AAA rated top tranche from Moody’s on an inaugural transaction. It’s a significant external validation of the quality of the Wisr business operations, underwriting performance capability and the mature stage the business has reached. The oversubscribed demand achieved across all tranches is a clear indication that investors want high quality assets originated by high quality companies, and Wisr has delivered that.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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