The PolyNovo Ltd (ASX: PNV) share price has returned from its trading halt and sunk into the red.
At the time of writing, the medical device company's shares are down 7% to $1.93.
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Why is the PolyNovo share price sinking?
The weakness in the PolyNovo share price has been driven by the completion of the company's institutional placement.
According to the release, the company has raised $30 million before costs through the issue of approximately 15.8 million shares at $1.90 per new share. This represents a 9.1% discount to the PolyNovo share price prior to the halt.
Management advised that the institutional placement was strongly supported by existing institutional shareholders and new domestic and offshore investors.
The company will also seek to raise a further $3 million via a placement to directors and $17 million via a non-underwritten share purchase plan. The latter is being undertaken at the same price as the equity raising.
Why is PolyNovo raising funds?
PolyNovo revealed that the proceeds from the equity raising will be used to accelerate growth in the United States and the rest of the world, including the newest markets of Canada, India, and Hong Kong.
In addition, the equity raising will fund the construction of a new co-located manufacturing, R&D, and office facility in Port Melbourne to satisfy a significant increase in demand for its NovoSorb product.
PolyNovo's CEO, Swami Raote, commented:
We are delighted to have received such strong demand from a number of our existing institutional shareholders who continue to support PolyNovo, and we welcome a number of new institutional investors as we continue on our journey to improve patient outcomes.
Proceeds from the equity raising will allow us to continue to capitalise on the significant opportunities available to us including geographic sales team and indication expansion, investment in R&D and the development of a new facility to satisfy the growing demand for NovoSorb.
