Why the Catapult (ASX:CAT) share price is down 12% today

This tech share is under pressure on Thursday…

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The Catapult Group International Ltd (ASX: CAT) share price has returned from its trading halt and is tumbling lower.

In early trade, the sports analytics and wearables company’s shares are down 12% to $1.92.

Why is the Catapult share price tumbling lower?

The weakness in the Catapult share price today follows the completion of its equity raising.

According to the release, the company has raised $35 million via an underwritten institutional placement of new shares at a price of $1.90. This represents a discount of 12.8% to its last close price.

The company advised that the placement was well supported, with strong investor demand from domestic and international institutions, both existing and new. In addition to this, two Catapult directors will subscribe for $1.35 million of shares on the same terms.

Catapult will now seek to raise a further $5 million via a share purchase plan. Eligible shareholders will have the opportunity to acquire up to $30,000 of new shares at the same price.

Why is Catapult raising funds?

Catapult is raising funds partly to support the strategic acquisition of leading sports software video solutions provider, SBG Sports Software. It also plans to increase its investment in technology, product, data science, and scale capacity, to accelerate its growth strategy.

In respect to SBG Sports Software, it is a global leader of video and data analysis solutions to elite teams in flow sports and motorsport. Management expects the strategic acquisition to accelerate growth in an unpenetrated section of Catapult’s core market.

Catapult’s CEO, Will Lopes, commented: “We are pleased to close the placement process a day earlier than planned. We have been overwhelmed with the endorsement from new and existing shareholders. The significant support we’ve received from the investor community, the board, and employees further cement our belief in the quality of the SBG acquisition and the exciting growth opportunity for Catapult. We are energized to translate this support into new and exciting solutions for our customers.”

The Catapult share price is now trading broadly flat year to date.

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Motley Fool contributor 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 and has recommended Catapult Group International Ltd. The Motley Fool Australia owns shares of and has recommended Catapult Group International Ltd. 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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