The Bubs Australia Ltd (ASX: BUB) share price is heading south following the company's retail component update.
At the time of writing, shares in the infant formula company are swapping hands at 58.5 cents, down 7.14%.
Bubs shares drop on equity raising efforts
So far, it's been a disappointing day for the Bubs share price with investors hitting the sell button.
In its release, Bubs advised it has completed its retail entitlement offer.
The pro-rata accelerated non-renounceable entitlement offer raised a total amount of around $22.9 million.
For every Bubs share owned, eligible retail shareholders could pick up 10.42 Bubs shares at a price of 52 cents apiece.
Valid applications for approximately 12.7 million new shares, worth roughly $6.6 million were received by Bubs.
The remaining 31.3 million new shares not taken under the retail entitlement offer will be allotted to the sub-underwriters.
Together with the institutional component of the entitlement offer and the $40.1 million institutional placement, Bubs has raised $63 million.
The proceeds of the equity raising are expected to be used for a number of strategic initiatives. This includes:
- Working capital to assist with the immediate scale up of group activities due to rapid market expansion
- Building up inventory levels given the current logistics environment
- Operating expenses for the US market (marketing, administration, employment costs, and consultancy fees)
- Expand canning capability at the Deloraine facility to meet growing demand
- Covering the costs associated with the equity raising
Bubs share price snapshot
Despite a challenging 12 months amid COVID-led channel disruptions, the Bubs share price has accelerated almost 30% over the period.
The company's shares touched a 52-week high of 84.6 cents on 30 May following a supply agreement with the US.
However, since then, its shares have retraced due to market volatility across the ASX which weighed down Bubs shares.
Based on today's price, Bubs commands a market capitalisation of around $400.17 million.
