--ADDS COMMENT FROM CHIEF EXECUTIVE--
Back office workforce optimisation software pioneer eg solutions (LON:EGS) is to raise £3.2mln to invest in a push for faster growth.
The company is issuing 4.9mln shares at 65p a pop, a 6p discount to last night’s closing price.
New investors are getting on board, while the placing is also being supported by existing investors, including some directors.
Talking of which, company founder Elizabeth Gooch, who has probably spent more time than she cares to remember answering questions about her curious job title of acting chief executive, has agreed to drop the “acting” part of her job description.
Current trading continues to be positive and the board expects the full-year financial performance will be in line with expectations.
The company also revealed that it intends to become completely debt free by issuing 1.2mln new shares to the providers of the company’s convertible loan facility arrangement, thus ending the facility.
When flush with cash, eg solutions intends to beef up its sales and delivery teams, while continuing to invest in product development and marketing.
The stronger balance sheet will also give confidence to potential clients, enabling eg to compete more effectively in tenders for new contracts.
"Why wait to accelerate growth?" said Gooch. "We're in favour with investors right now and want to keep building the business.
"Also our clients, mostly the large banks, are looking for a little more security and that means us having a stronger balance sheet."
As previously indicated, strategic acquisitions to complement organic growth also remain a possibility, should suitable opportunities arise.
“The company has made great progress both financially and operationally, and we now have a record order book including increasing recurring revenues. This fundraising will enable the group to build on its recent successes by investing further and accelerating our growth plans," said Duncan McIntyre, chairman of the company.
Recurring revenues have increased 69% in the year to date, the company revealed, and repeat and recurring revenues now account for around half of total expected revenue for the current financial year.
Looking ahead further, eg has a pipeline of around £36 million of revenue opportunities arising from both direct sales leads and as a result of its partnership with Aspect.
As is the way with most discounted share placements, the share price retreated towards the placing price, falling 5.55p to 65.45p, valuing the company at £11.25mln.