The convertible note offering gives AV1 added balance sheet strength to rapidly expand the customer base for its TrafficGuard fraud prevention software.

ASX cybersecurity platform Adveritas (ASX:AV1) has locked in funding for its next phase of growth, with a $3m convertible note issue backed by a suite of major investors.

The funds raised will give Adveritas extra balance sheet strength at a key point in its growth cycle, with the capital backing to accelerate existing growth initiatives.


Strategic rationale

In raising the funds through a convertible note, the Adveritas board cited a number of strategic advantages in comparison with an equity capital raise.

For starters, the deal was reached on favourable conversion terms for the company and its shareholders.

The Convertible Notes have a two-year term, with an 8% per annum coupon rate.

The conversion price is based on 80% of the company’s 90-day VWAP (volume weighted average price), subject to a ceiling price of 17c per share and a floor price of 8c per share, with AV1 shares currently trading at 10c.

In addition, Adveritas has the option to redeem the Convertible Notes prior to their maturity which provides greater flexibility.

It also provides a more efficient capital raise mechanism compared to a direct equity raise, at a time when the company is focused on the Google Cloud Marketplace rollout.

“Given the growth opportunities visible to Adveritas, we are confident that this capital raise is in the best interest of all shareholders as it minimises dilution, while further strengthening the balance sheet to support the attractive growth trajectory we see for the business,” AV1 CEO Mathew Ratty said.


Investor backing

Highlighting wide support for the raise, Adveritas said the Convertible Note offering found strong demand from a network of strategic, professional and sophisticated investors.

“The offer was supported by both long term shareholders, who have participated in previous capital raisings, and new investors,” the company added.

Funds raised from the offer will go towards multi-channel sales and marketing activities, as well as expanded digital advertising for TrafficGuard, AV1’s proprietary fraud prevention software.

The group will also hire additional sales staff to drive growth in Asia and Europe, and support the rollout of TrafficGuard on the Google Cloud Marketplace where it’s already live.

Ratty said the Google Cloud Marketplace distribution forms part of AV1’s channel partnership strategy, one of the company’s three core pillars for growth.

The other two key strategies are direct sales, as well as ‘land and expand’, where existing contracts are upsold into additional products.

Through that strategy, the company has now established the “foundations for global growth”, Ratty said.

“I would like to thank our loyal shareholders, and new investors, for supporting the company through this raise at an exciting juncture in our growth strategy,” he said.


This article was developed in collaboration with Adveritas, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.