Flexiroam (ASX:FRX) share price surges 24% following cap raise

The company’s shares are set to end the week on a positive note.

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The Flexiroam Ltd (ASX: FRX) share price has come out of a trading halt today to rocket during mid-morning trade. This comes after the mobile network operator provided an update on its recent equity raise.

At the time of writing, Flexiroam shares are swapping hands for 4.2 cents, up 23.53%

Flexiroam completes placement

One catalyst for today’s surge in the Flexiroam share price could be investor appetite over its planned growth initiatives.

According to its release, Flexiroam announced it has completed a placement to raise $1.5 million with no fees payable. A number of existing professional and sophisticated investors including two large shareholders in the company participated in the placement.

The offer will see 37.5 million fully-paid ordinary shares, at a price of 4 cents apiece, allocated to the investors. This represents an 18% premium on the issued securities prior to when the company went into a trading halt on Wednesday.

Flexiroam will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to an additional 15% of its total shares to be issued without shareholder approval.

The company will use the proceeds from the capital raise to fund a variety of growth opportunities. This includes:

  • Developing new eSIM solutions to capture Internet of Things (IoT) demand
  • Executing on the growing pipeline of Flexiroam solutions
  • Hiring sales & engineering resources across Europe to increase capacity and capability
  • Driving global penetration and substantial revenue expansion in FY23

The new shares are expected to be issued on the ASX on 27 October.

Flexiroam CEO, Marc Barnett commented:

This capital raise, undertaken at a premium to the last traded price, is a strong signal of the value that our large investors see in Flexiroam and their confidence in the Management team’s ability to deliver on the opportunity in front of us.

We have an ambitious growth strategy across both our Travel and Solutions verticals. The funds raised provide us with additional capital to execute on our growth plans, and the premium valuation highlights the inherent value of our business relative to our market capitalisation.

Flexiroam share price summary

Adding to today’s meteoric gains, Flexiroam shares have jumped around 140% in the past 12 months. The company’s share price is still some way off its 52-week high of 9.6 cents reached in early February.

Based on valuation grounds, Flexiroam commands a market capitalisation of around $20.63 million, with over 503 million shares outstanding.

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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. 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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