EROAD (ASX:ERD) share price slumps on opening of SPP

The transport tech company has launched the second part of its capital raise.

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The EROAD Ltd (ASX: ERD) share price is ending its consecutive run of green days today following the opening of its Share Purchase Plan (SPP).

Established in 2000, EROAD is a technology, tolling and services provider based in Auckland, New Zealand. The company designs and manufactures in-vehicle hardware providing road charging, compliance and commercial services.

At market close, the transport technology company's shares finished 2.21% down, to $6.20.

EROAD begins Share Purchase Plan offer

Investors are weighing down EROAD shares after the company's latest announcement to the ASX.

According to its release, EROAD commenced a NZ$16.1 million (A$15.19 million) non-underwritten SPP.

The SPP follows the company's NZ$64.4 million (A$60.77 million) placement to partly fund the acquisition of telematics provider Coretex. This consists of an upfront fee of NZ$157.7 million (A$148.71 million) and NZ$30.6 million (A$28.85 million) in contingent consideration payable in FY 2023.

EROAD management believes the takeover will be transformational, positioning it as a bigger player in the global telematics market.

The shares of the SPP will be issued at the lower of the price paid by investors in EROAD's recent placement. This is NZ$5.58 (A$5.26) per new ordinary share.

The company stated that up to $30,000 worth of shares can be applied for. However, it may accept oversubscriptions or scale back applications at its discretion based on the result of the SPP.

Settlement of the shares from the SPP is expected to occur on 13 August 2021.

About the EROAD share price

Over the last 12 months, EROAD shares pushed higher to reach an all-time high of $6.51 yesterday. This brings the share price gain for the period to around 56% and almost 33% higher for 2021.

At today's price, EROAD commands a market capitalisation of roughly $511 million, with approximately 81 million shares on its registry.

Motley Fool contributor Aaron Teboneras 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 EROAD Limited. The Motley Fool Australia owns shares of and has recommended EROAD Limited. 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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