Nitro shares have returned after raising $117 million from institutional investors…
The post Why the Nitro (ASX:NTO) share price is down 9% on Thursday appeared first on The Motley Fool Australia. –
At the time of writing, the global document productivity software company’s shares are down 9% to $3.50.
Why is the Nitro share price sinking?
The Nitro share price is falling after announcing the completion of the institutional component of its $140 million equity raising.
The company raised a total of approximately $117 million from institutional and sophisticated investors at $3.43 per new share. This represents a 10.7% discount to the Nitro share price prior to the trading halt.
A fully underwritten retail entitlement offer, which will raise a further $23 million, will open on 16 November and close on 30 November.
Why is Nitro raising funds?
Nitro launched its equity raising after entering into a binding agreement to acquire Connective NV for an enterprise value of €70 million (~US$81 million or ~A$110 million).
Connective is Belgium’s leading eSign software-as-a-service (SaaS) business, with a fast-growing market share in France and customers in 11 other European countries.
It is focused on serving the needs of enterprise and government customers that require high levels of trust, security, and regulatory compliance. It also offers expansive electronic identity (eID) support and a powerful document workflow automation solution.
The team at Bell Potter are very positive on the deal, referring to it as a “game changer”.
Its analysts commented: “We have updated our forecasts for the acquisition and the impact is revenue upgrades in 2022 and 2023 of 13% and 16%. There is no change in our 2021 forecasts as the acquisition is only expected to be completed in late December and the company also reiterated its 2021 guidance with the announcement of the acquisition today. We have modestly increased our forecast operating EBITDA loss in 2022 but also modestly increased our forecast operating EBITDA profit in 2023 as we expect Connective to be EBITDA positive in that period.”
Bell Potter has a buy rating and $4.50 price target the company’s shares. Based on the current Nitro share price, this implies potential upside of 28%.
The post Why the Nitro (ASX:NTO) share price is down 9% on Thursday appeared first on The Motley Fool Australia.
Should you invest $1,000 in Nitro right now?
Before you consider Nitro, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Nitro wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.