S&P/ASX 200 Index (ASX: XJO) tech stock Megaport Ltd (ASX: MP1) has been on a tear this year.
Shares in the network-as-a-service solutions provider closed Monday trading for $15.30. In morning trade on Wednesday, after emerging from yesterday's trading halt, shares are changing hands for $15.15, down 0.9%.
Despite that dip, investors who bought the ASX 200 tech stock on 2 January will be sitting on gains of 104.2% today. Or enough to turn an $8,000 investment into $16,334 in just over 10 months.
And with the company's shares surging, management is raising capital to fund two new acquisitions.
Here's what's happening.
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ASX 200 tech stock on the acquisition path
This morning Megaport announced the successful completion of its $200 million fully underwritten institutional placement.
The ASX 200 tech stock entered a trading halt yesterday after announcing the capital raising to the market.
Megaport shares are likely under some pressure today, with the placement of the new 14.0 million shares to be issued at a price of $14.30 apiece. That's 6.5% below Monday's Megaport share price at market close.
The company intends to use the funds to help finance its acquisition of Latitude.sh, and to fund the accelerated network expansion of its operations in India.
Megaport said the placement was strongly supported by both its existing shareholders and new investors. Indeed, the company received "substantially more" bids than the $200 million placement amount.
Management expects settlement of the new placement shares to occur this Friday.
And the ASX 200 tech stock is not done raising funds yet.
Megaport will also offer eligible Australian and New Zealand shareholders the opportunity to participate in a non-underwritten Share Purchase Plan (SPP). The SPP aims to raise up to an additional $20 million, bringing the total funds raised to $220 million.
The company said that the funds raised under the SPP will be used for general corporate and working capital purposes.
What did management say?
Commenting on the funding injection for the ASX 200 tech stock, Megaport CEO Michael Reid said, "We're very pleased with the support received from existing and new investors for this placement as Megaport takes the logical next step in its evolution."
Reid added:
The acquisition of Latitude.sh and the accelerated network expansion in India creates the automated global software platform where networks and compute converge to connect critical workloads. We are optimally positioned to scale and grow at the heart of the hybrid cloud and AI-driven future – Let's Go!
