Medtech company Volpara tapped a global network of private investors for its $55m capital raise
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ASX-listed medical tech players Volpara Health (ASX: VHT) is on the acquisition trail.
On Monday, the company announced a binding agreement to acquire US-based MRS Systems in a $21.15m deal.
MRS provides management software to more than 1,700 breast cancer clinics in the US, around 20 per cent of the market.
The deal provides Volpara with access to a big new data set on which to apply its AI-based Software-as-a-service (SaaS) technology used in the early detection of breast cancer.
To fund the deal, Volpara raised capital via a $45m placement to institutional shareholders, along with a $10m right issue to eligible shareholders.
Stockhead spoke with Volpara CEO Dr Ralph Highnam to discuss key aspects of the private placement.
The funds will be sourced from a mix of new and existing investors — a result of increased interest in the New Zealand-based over a number of years.
“Over the last few years we’ve had a number on international investors visit us in New Zealand looking for an opportunity to invest,” he said.
“We’ve been getting interest from the US and UK — largely private equity. And we’ve met some family offices in Hong Kong who are fully aware of the breast cancer epidemic across Asia, and are looking to do anything they can to stop its rise.”
Closer to home, Volpara will also welcome some new additions to its register from across the Tasman.
“Several new Australian investors have come in on the latest round,” Highnam said.
“We’ve never had any dialogue with them before this round, but it’s fair to say they’re well-known strong institutions and we’re looking forward to having them on board with us.
“Current institutional shareholders like Harbour Capital and SG Hiscock have been very supportive.”
The raise is being lead managed by Bell Potter Securities who are also fully underwriting it — an indication of strong underlying demand, Highnam said.
In addition to funding its purchase, Highnam said the funds would go towards financing the company’s scale-up strategy over the next couple of years.
“We wanted to make sure we had enough cash in the bank to grow the business over the next two years,” he said.
While the acquisition gives Volpara a footprint in the US market, it will still need operating capital to unlock value.
“We’re getting a lot of traction here, but to go to the next level we really need access to more data.”
Having purchased MRS, Highnam said additional funds will now be allocated to building out the US sales team.
“I think critical mass and presence is a big factor in this market. We’re already seeing the buzz of our team in the US – the prospect of having support mechanisms and being able to say ‘yeah, we have a major office in Seattle’,” Highnam said.
The company will also expand the team of data scientists at its engineering hub in New Zealand.
“Short-term, our priority will be on going through the MRS customer list, working out who our partner customers might be and targeting them.”
“I think the acquisition has really lifted the whole company. The next step is to integrate our processes now and get on with the job,” Highnam said.