Senetas launches $5M capital raise for high-growth subsidiary Votiro

Senetas Corporation (ASX: SEN) announces a capital raise of up to A$5 million to support the growth of its cybersecurity portfolio
The capital raise is partially underwritten with significant commitments from entities associated with Senetas’ leadership
Funds raised will accelerate Votiro’s growth, capitalising on expanding sales and targeting increases in annual recurring revenue

Senetas (ASX:SEN) , an ASX-listed leader in encryption and cybersecurity solutions, has a $5 million capital raise to seize growth opportunities in the cybersecurity sector.

The raise signals a strategic pivot. The company now turns to expanding its market reach and the development of its subsidiary Votiro, a distinctly different cybersecurity venture from its encryption-focused parent company and a key part of Senetas’s portfolio.

Senetas specialises in encryption technologies that act as a fail-safe for data, while Votiro focuses on anti malware content disarm technologies that neutralise any malicious code in documents before they can even reach a user’s inbox.

Votiro’s potential is clear, with an impressive sales pipeline, which more than doubled during the 2023 financial year. The company has added US$10 million to its pipeline in the first half of 2023 alone and is targeting annual recurring revenue of up to US$10 million by year-end.

As of September 2023, Votiro has already achieved a 60% increase in annual recurring revenue since the previous year. Its performance is a testament to the burgeoning demand for more modern and advanced cybersecurity solutions, particularly those that can effectively prevent malware and ransomware attacks.

A strategic capital raise

The company plans to raise up to $3.5 million through a partially underwritten non-renounceable pro rata entitlement offer to eligible Australian and New Zealand shareholders. The offer is priced at $0.014 per share, with shareholders entitled to 1 new share for every 4.86 shares held. In addition, for every 3 new shares subscribed, shareholders will receive 1 option, exercisable at $0.025 per share, valid for 12 months.

Complementing this, Senetas has secured commitments for an additional $1.5 million through a placement to institutional and sophisticated investors. These funds are earmarked for accelerating the development of Votiro’s business and bolstering general working capital, a strategic move for Senetas as it diversifies its portfolio.

Director commitment and partial underwriting

This capital raise is partially underwritten, with commitments already in place for $2.05 million of the target amount.

Notably, entities closely associated with the company’s leadership, including Southbank Capital (linked to Senetas chairman, Francis Galbally) and MST Financial Services, are co-underwriters. The directors’ decision to participate in the offer, either through entitlement take-up or sub-underwriting, reflects their confidence in the company’s strategic direction.

Growth through diversity

Votiro’s anti-malware and ransomware solutions represent a significant opportunity, with a larger addressable market than Senetas’s traditional encryption offerings.

Senetas’ decision to undertake this capital raise is a calculated step to capitalise on recent growth in the cybersecurity sector. For investors and shareholders, this represents a unique opportunity to be part of a pivotal growth phase in a company at the forefront of cybersecurity innovation. The offer is due to close on 15 December 2023.

This article was developed in collaboration with Senetas, 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.