PointsBet share price jumps 15% on SIG investment and bonus options news

PointsBet’s shares are heading higher at last…

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Key points

  • PointsBet shares have jumped out of the gates on Monday
  • This follows news of a major strategic investment from a large US financial company at a sizeable premium
  • PointsBet also revealed that it will be issuing bonus options to shareholders

The PointsBet Holdings Ltd (ASX: PBH) share price has started the week strongly.

In morning trade, the sports betting company’s shares are up 15% to $2.48.

Why is the PointsBet share price racing higher?

The catalyst for the rise in the PointsBet share price this morning has been news of a major strategic investment.

According to the release, SIG Sports Investment Corp (SIG) has invested $94.16 million into PointsBet via a placement of shares.

US-based SIG is one of the largest proprietary financial trading firms in the world, with additional business verticals encompassing derivatives market making, institutional brokerage, private equity, sports analytics and structured capital.

The release notes that SIG will receive 38,750,000 shares for its investment, which equates to a price of $2.43 per share. This represents a 13% premium to the PointsBet share price at Friday’s close or a 15% premium to its five-day VWAP.

This purchase makes SIG the company’s largest shareholder with a 12.8% stake.

In addition, PointsBet has signed an agreement with SIG’s Nellie Analytics business. This will see the two parties scope and develop the terms for Nellie Analytics to provide sports analytics and quantitative modelling services to complement PointsBet’s existing capabilities and accelerate its technology roadmap.

SIG co-founder and managing director Jeff Yass said: “After several years of thoroughly evaluating the North American sports betting market for the right partner, SIG Sports is pleased to have made what we consider to be a long-term investment in PointsBet.”

PointsBet Chairman Brett Paton echoed this sentiment. He said: “We are delighted to pair up with a visionary investor which has committed ongoing support and is eminently qualified in analytical trading in financial markets, and now in sports.”

Bonus options for shareholders

In other news, PointsBet has announced a pro-rata deferred bonus equity option (DBEO) issuance to eligible shareholders. This provides the company with the opportunity to raise up to approximately $150 million during the next two years.

According to the release, eligible shareholders will receive one DBEO for every 20.2 ordinary shares held at 7pm (AEST) on 5 July 2022 for nil consideration. Eligible shareholders do not need to take any action to be issued the bonus options.

After which, at any time up until 7 April 2024, PointsBet may elect, at its own discretion, to allow shareholders the right to exercise their DBEOs.

If this occurs, each DBEO will grant the shareholder the right to acquire $10 worth of PointsBet shares at a discount. That discount will be based on a rather convoluted process. The release explains:

Each DBEO will grant the holder the right to acquire A$10 worth of PointsBet ordinary shares at a 20% discount to the arithmetic average of the daily volume weighted average price per ordinary PointsBet share traded on the ASX during the ten (10) consecutive trading days commencing two (2) business days after the exercise period concludes.

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. has positions in and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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