The Nick Scali Limited (ASX: NCK) share price has returned from its trading halt with a bang.
At the time of writing, the furniture retailer's shares are up 14% to a record high of $16.02.
Why is the Nick Scali share price rocketing?
Investors have been scrambling to buy the company's shares today after responding positively to its plans to enter the UK market.
To support its entry, Nick Scali's shares were in a trading halt whilst it undertook a capital raising.
This morning, it has successfully completed the institutional component of this raising. According to the release, Nick Scali raised $46 million via a fully underwritten institutional placement of approximately 3.5 million new shares at a price of $13.25 per new share.
The company revealed that the institutional placement was strongly supported by both existing shareholders and new institutional investors.
Nick Scali's CEO and managing director, Anthony Scali, said:
We are very pleased with the strong support for the Institutional Placement and our growth plans in the United Kingdom. The acquisition of Fabb Furniture and entry into the UK market is an important strategic step for Nick Scali which is expected to unlock a significant opportunity for profitable growth in the future.
The company will now push ahead with its share purchase plan. It aims to raise a further $10 million from retail shareholders at the same price. And given how the offer price now represents a very attractive 17% discount to where the Nick Scali share price trades, I doubt it will have any issues raising these funds.
In addition, a $4 million conditional placement to its CEO will be voted on later this year at a shareholder meeting.
UK expansion
As we covered here earlier this week, Nick Scali is entering the UK market after signing an agreement to acquire specialist UK home furniture retailer, Fabb Furniture, for a total consideration of 3.5 million pounds (A$6.7 million) including debt.
Commenting on the acquisition, Anthony Scali said:
The Acquisition of Fabb Furniture provides an opportunity to enhance our geographic diversity and scale beyond Australia and New Zealand for the first time. The Acquisition provides us an immediate entry point into the large UK market with a 21-store network across key locations; a scaled platform to establish the Nick Scali brand and product offering in an attractive new market.
Judging by the performance of the Nick Scali share price today, the market appears to approve of this expansion plan.
