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The implications of Nearmap’s $90 million capital raise

We examine the key implications of the company’s capital raise, announced on 10 September.

Nearmap share price action & cap raise in focus

Aerial imaging company Nearmap (NEA) today announced that it would be launching a ~$90 million capital raise as a means of capitalising ‘on the momentum of the business and the tailwinds in the industry.’

Overall, the last year has proven to be a volatile one for Nearmap shareholders, with the stock swinging between a 52-week high of $3.22 per share and a low of 83 cents per share.

The last six months however has been more fortuitous for the company, with the stock up 121% in that period, far outpacing the ASX 200 benchmark.

Though Nearmap has been put in a trading halt pending the completion of the capital raise, the stock last traded at $2.89 per share – moderately off its 52-week high.

'Nearmap continues to focus on the global opportunity to become the world's leading provider of subscription-based location intelligence,' said Dr Rob Newman, the company's CEO and MD.

Details of the raise

As part of today’s announcement, Nearmap said it was aiming to raise around $90 million in fresh capital – made up of a minimum $70 million institutional placement and a $20 million share purchase plan (SPP).

Among other things, the company said it would use the funds from the capital raise to:

  • Invest in sales and marketing initiatives, with a particular focus on North America;
  • Speed up the introduction of the company's HyerCamera3 system;
  • Invest in systems and data to support the company’s growth ambitions; and
  • Gain the flexibility to pursue other growth opportunities as they arise

On a more granular level, under the institutional side of the raise, the company said it would issue approximately 26.0 million new shares – equivalent to 5.7% of Nearmap's total share count.

Though the exact pricing of the institutional offer has yet to be determined – the floor price of the placement issue stands at $2.69 per share, while the upper-end of the placement price stands at $2.77 per share.

The placement will be fully underwritten by Citigroup.

By comparison, under the share placement plan (SPP), eligible investors will be able to apply for up to $30,000 worth of Nearmap stock.

‘New Shares under the SPP are to be issued at the lower of the price paid by investors under the Placement and a 2.5% discount to the 5-day VWAP of Nearmap shares up the SPP closing date,’ the company flagged.

The SPP will close on 5 October and will not be underwritten.

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Details of the sell-down

In addition to the capital raise, it was also announced that Citigroup would concurrently be facilitating a director sell-down.

Specifically, it was reported that one of Nearmap's Non-Executive Directors, Mr Ross Norgard, would be selling some 15.1% of his holdings – representing approximately 4.2 million Nearmap shares.

The director sell-down would be fully-underwritten, with the pricing set to be determined as part of a bookbuild.

Following the capital raising Nearmap said it would have a minimum cash balance of $105 million.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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