Splitit to raise another $40m from investors as director sells down; shares slide
After an exponential rise from 20 cents to $2 within just 6 weeks of listing then a decline, it seemed the share price of buy now pay later play Splitit (ASX: SPT) was becoming less volatile.
But this afternoon, the company announced a $40m capital raise at 80c per share and the share price has begun to fall.
After trading at 95c until 1pm, it fell as low as 88c since the announcement of the capital raise.
The fundraising round involves a $30m placement which has already been completed, and a $10m rights issue. Additionally, director Alon Feit will sell 2.6 million of his own shares in a separate offering.
The company told shareholders the sale was strictly to meet an Israeli tax bill, not because of a lack of confidence in the company and reminded them he would still be a substantial holder. Splitit estimates Feit will hold no less than 7.99 per cent after the completion of the capital raise.
“Mr Feit wishes to reiterate that the disposal of the sale shares is not a reflection of his valuation of the company, nor his confidence in the company’s prospects,” Splitit said.
Although Splitit only made US$322,000 ($467,605) in revenue and lost US$2.54m, the company told shareholders it was because of consumer demand rather than cash shortages.
“After a successful IPO in January this year, Splitit’s growth in merchant and user take-up has been faster than expected”, the company said.
“New strategic opportunities are also arising which have the potential to accelerate the company’s market penetration and product offering.
“The proceeds of the placement and SPP will enable Splitit to increase its capacity to meet the current excess demand for its products, pursue its growth strategy at a faster rate than was anticipated in its IPO prospectus and allow it to capitalise on existing and new opportunities as they arise.”
While Armada Capital led Splitit’s IPO, for this new capital raising the company has turned to Morgans. Splitit anticipates the placement will settle Thursday May 23. Following this, the retail offer will open on May 28 and close on June 17.