The implications of Nearmap’s $90 million capital raise

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.