Here’s why the IntelliHR (ASX:IHR) share price is plunging 10% today

The data analytics company’s shares are falling after a successful capital raising

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The IntelliHR Ltd (ASX: IHR) share price is taking a dive today, down 10.34% at 26 cents. Although, in early trade, shares reached a low of 24 cents apiece.

This follows the completion of the data analytics company’s recent $11.5 million placement.

What’s impacting the IntelliHR share price today?

In a release to the market this morning, IntelliHR informed investors of its successful capital raising. The placement was conducted at 23 cents per share — receiving “very strong” interest.

According to the announcement, the capital raising gained the backing of a number of leading Australian and offshore institutional and sophisticated investors.

The offer price represented a steep 20.7% discount to the last close price of 29 cents. This significant discount, coupled with the share count being diluted by roughly 18%, is likely contributing to the IntelliHR share price weakness today.

Approximately 50 million new IntelliHR shares at the issue price of 23 cents were allocated, resulting in $11.5 million being raised in total before costs.

These funds will be put towards various drivers for the continued growth of the IntelliHR business. These include expanding its global integrations and referral partnership channels; accelerating growth in domestic and global customer business development; and building out enterprise customer platform capabilities.

Additionally, approximately 6.5 million existing shares were divested by managing director Robert Bromage. Despite this selldown, Bromage remains the second-largest shareholder in the company, holding approximately 21 million IntelliHR shares. The sale is said to be for funding the purchase of a residential property.

Bromage commented on the placement that is likely affecting the intelliHR share price:

Thanks to record global organic growth during FY21 and recent channel partnership successes, this capital raising presented us with the opportunity to introduce a number of leading Australian and international institutional investors onto the register.

With intelliHR continuing to invest in accelerating global growth, the introduction of these investors onto the register will strongly support our growth aspirations given their SaaS [software as a service] sector investing track record and significant funds under management.

What’s next?

The issuing of approximately 46.38 million shares will be conducted on or around 27 September 2021. These are not subject to shareholder approval.

However, the 3.62 million new shares placed with IntelliHR’s largest shareholder, Colinton Capital Partners, will be subject to shareholder approval. In fact, shareholders will vote on it at the annual general meeting in November.

The intelliHR share price is down by around 50% since the start of the year but is up by about 28% in the past 12 months.

Based on the current IntelliHR share price, the company’s market capitalisation stands at around $89.4 million when accounting for dilution.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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