The company is looking to raise capital to fund an acquisition.
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The Catapult share price closed yesterday’s session 6.3% higher at $2.18. Let’s take a look at what the company announced this morning.
Catapult shares frozen
Catapult shares won’t be going anywhere on Wednesday after the company advised it’s undergoing a $57 million capital raising at $1.90 per share. The funds are being raised for the acquisition of SBG Sports Software Limited, a global leader of video and data analysis solutions for elite sports teams and motorsports.
Under the acquisition terms, Catapult will be forking out $20 million in cash and $20 million to $25 million in new Catapult shares to buy company.
Catapult believes bringing on board video data solutions will accelerate its growth in an unpenetrated section of its core market.
What does SBG do?
SBG began as a software developer to support data analysis, visualisation and video capture for the motorsports industry.
The company has a number of high profile partners including Mercedes, BMW, Porsche, and Audi. SBG provides solutions that help its clients make faster, more accurate and consistent decisions on the race track.
SBG has since expanded into traditional sports, with a suite of products to help coaches break down factors driving team performance and reduce weekly workflow times.
The company has seen a “remarkably fast adoption” of its technology in the European football leagues, with 70% of the English Premier League using at least one product within the last four years, and 38% of the German football league using at least one product within two years of market entry.
From a financial perspective, SBG’s revenue grew by 28% in FY21, with 100% of revenue derived from subscription.
Catapult is confident that the SBG acquisition will drive its continued short to medium-term annual contract value (ACV) growth.
Through the capital raising, Catapult has also announced its plans to allocate $17 million for an expansion in its technology, product and data science capabilities.
According to the capital raising presentation, the company is confident in its long-term strategy to expand its ACV to 10 times its current size.
Catapult share price snapshot
Excluding the March 2020 selloff, the Catapult share price has largely been range bound between highs of $2.20 and lows of $1.60 since November 2019.
The company was heavily impacted by COVID-19 lockdowns as the competitive sporting industry came to a grinding halt. However, Catapult has seen a slow pickup in revenue growth, evidenced by its FY21 results.
Catapult shares are expected to resume trading by Thursday 24 June.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Catapult Group International Ltd. The Motley Fool Australia owns shares of and has recommended Catapult Group International Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.