eServGlobal Limited (ASX: ESV) announced the total fundraising of A$33.4 million via placement of 304,000,000 new shares of eServGlobal at an issue price of A$0.11 per share. The placement was done by way of Firm placing, Institution offer and Clawback placing under the retail offer.
The break-down of the fundraising includes A$24.37 million from Firm placing via the issue of 221,559,031 new shares, A$6.90 million Institutional Offer via the issue of 62,716,449 news shares and Clawback Placing of A$2.17 million via the issue of 19,724,520 new shares under the Retail Offer.
But, how the company is going to utilize these funds?
The financial technology provider eServGlobal Limited told that fundraising will be majorly utilized to fund support the eServGlobal’s share of the expected capital raise in the joint venture HomeSend. This means that on the back of expected call for capital raise of A$82.54 million in JV HomeSend, eServGlobal will bring in his share (35.69%) of capital raise underpinned by A$28.6 million proceeds received from placement.
eServGlobal holds 35.69% share in a joint venture of the HomeSend while the partner Mastercard holds the remaining 64.31% share of the JV. HomeSend is a global payment hub which enables cross-border transfer between cards, bank accounts, mobile wallets or cash outlets across the world.
The increased funds of A$82.54 million in HomeSend are reported to be utilized in the development of inhouse foreign exchange capabilities, deepen the HomeSend Network and provide funding of approximately A$54.48 million to support significant growth in volume in 2019.
After supporting HomeSend capital increase, the part of fundraising amounting to A$3.34 million would be utilized in the strengthening of the eServGlobal’s core business for sale. It is because the company is into ongoing discussion with some interested parties in respect of sale of its core business. eServGlobal Limited told that the update on the sale transaction is expected to be out in the market within 2 months.
The company is anticipating a return to growth in its core business this year. It was reported that cost base has reduced by A$9.91 million as compared to FY17, thereby delivering an annual breakeven run rate of A$18.17 million – $18.99 million.
The share price of eServGlobal Limited has plunged by 4.348% to $0.110 on 4 October 2018. The stock has seen a performance change of -20.50% over the past one year.
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