Tuesday, 20 March 2018 12:29

Megaport looks for $60m in funds to accelerate expansion Featured

By
Megport's Bevan Slattery Megport's Bevan Slattery

Interconnection services provider Megaport is to raise up $60 million  to expand its capability to deliver connectivity to a broader customer base.

The ASX-listed company (ASXA:MP1), founded by major shareholder Bevan Slattery, is set to raise $50 million in new equity via a placement to institutions, sophisticated and professional investors, and up to $10 million via a share purchase plan.

The capital raising will see Slattery sell down some of his shareholding but still retain 23% of the company.

As well as expanding its capability to deliver connectivity to a broader customer base outside of the current footprint, including via its new Megaport Cloud Router service, Megaport says it also aims to consolidate its first-mover advantage.

The funds will be used to upgrade network capacity, accelerate expansion to new locations and new markets, and fund staffing, marketing and operating costs and general working capital requirements.

Megaport will issue 13,333,334 fully paid ordinary shares under the Placement at an issue price of $3.75 per share, raising approximately $50 million. The issue price represents a 7.4% discount to the closing price of $4.05 per share on 19 March 2018, the last trading day before Megaport announced the placement.

Megaport says it has received very strong interest in the placement from US institutional investors, culminating in commitments from three cornerstone investors who have agreed to subscribe for over $50 million of shares at $3.75 per share.

Megaport chief executive Vincent English said: “We have been very pleased with the level of commitment from some of the most respected sector-focused international institution.

“Given their deep experience, they explicitly understand that our ability to invest in our competitive advantage - developing new innovative services while we continue to grow our ecosystem of service providers - will make connectivity even easier for a broader set of the digital supply chain.

“Enabling our Software Defined Network in more markets that are currently underserved by cloud connectivity is critical to maximising our first-mover advantage.

“This Capital Raising will enable Megaport to support these strategic initiatives and fuel the connectivity services driving tomorrow’s IT architectures.

“To help facilitate the broadening of our international institutional base and to assist with liquidity, concurrent with the placement, our chairman, founder and major shareholder Bevan Slattery has agreed to offer 6,666,667 shares to institutions, sophisticated and professional investors via a secondary offering (secondary offering).

English said at the conclusion of placement and secondary offering, Slattery would hold a relevant interest in 23.0% of Megaport.

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Peter Dinham

Peter Dinham - retired and is a "volunteer" writer for iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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