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Novatti Group (ASX:NOV) - Managing Director, Peter Cook
Managing Director, Peter Cook
Source: Australian FinTech
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  • Novatti Group (NOV) launches a $45 million capital raise to acquire a 19.9 per cent stake in Reckon (RKN) for $22.5 million and to expand its business
  • Managing Director, Peter Cook, says investing in the accounting software company will open up new opportunities and potentially deliver growth
  • The capital raise includes a $40 million placement where over 72.7 million shares will be issued across two tranches
  • The remaining $5 million will be raised through a share purchase plan
  • Company shares are down 8.59 per cent and trading at 58.5 cents

Novatti Group (NOV) has launched a $45 million capital raise to support its growth strategy.

The capital raise includes a $40 million placement and $5 million share purchase plan.

Under the placement, up to 72,727,273 shares will be issued across two tranches with the second tranche being subject to shareholder approval.

The shares will be issued to sophisticated and institutional investors at 55 cents per share which represents a 14.1 per cent discount to the last closing price and a 20.9 per cent discount to the 15-day volume-weighted average price.

Novatti expects shares under the first tranche will be issued on or around July 9. A shareholder meeting will be held on August 18 to seek their approval for the second tranche. If approved, the tranche two shares are expected to be issued on or around August 24.

Alongside the placement, Novatti will launch a $5 million share purchase plan (SPP), allowing shareholders to apply for up to $30,000 worth of new shares at the same issue price as under the placement.

The fintech company will use the $45 million to fund the partial acquisition of ASX-lister, Reckon (RKN), which it announced earlier this week.

Novatti will acquire a 19.9 per cent interest in the accounting software provider for around $22.5 million.

Reckon reportedly has strong cashflow generation and is known to pay sustainable dividends to its shareholders. For the 2020 financial year, the finance stock recorded $75.6 million in revenue and $32.6 million in earnings before interest, taxes, depreciation and amortisation (EBITDA).

Novatti Managing Director, Peter Cook, said this is a strategic investment for the company as it will open up new opportunities and potentially deliver growth.

“With revenue of more than $75 million, EBITDA of more than $32 million, and a rapidly growing pool of more than 100,000, cloud-based customers, we believe this stake in Reckon presents an attractive investment for Novatti,” Mr Cook said.

In addition to the acquisition, the company will use the money raised to expand its business.

“For example, since Novatti undertook its last substantial capital raising in the June FY20 quarter, quarterly sales revenue has increased by 33 per cent. At the same time, Novatti’s market cap has also increased by more than 200 per cent.”

The company expects the acquisition will be finalised once the first tranche of shares under the placement have been issued.

Company shares were down 8.59 per cent and trading at 58.5 cents at 10:20 am AEST.

NOV by the numbers
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