Bevan Slattery's Superloop just raised $20 million but its share price got hammered

Bevan Slattery Source: subpartners.net

Brisbane network connectivity company Superloop has closed a $20 million capital raising round through a share placement and has offered to raise another $15 million from existing shareholders.

The public company previously offered the new shares at $2.25 to institutional and sophisticated investors, with the settlement of the 8.9 million new shares due on Friday September 29.

Superloop on Thursday also offered existing shareholders a chance to buy additional shares at the same price to raise a maximum of $15 million, to be settled at the same time as the $20 million round.

Superloop shares closed at $2.54 at the end of Wednesday, with the price falling 7% to $2.36 on Thursday morning after the announcement.

The company, led by Queensland entrepreneur Bevan Slattery, owns and operates wholesale fibre optic networks amounting to more than 600km throughout Australia, Hong Kong and Singapore. Acquisitions have resulted in Superloop also owning the BigAir Group, APEXnetworks, CINENET Systems and SubPartners brands.

The new funds would be used for “further customer-led network expansion, possible strategic acquisitions and balance sheet flexibility for future strategic growth opportunities”, according to the announcement made on the ASX.

RBC Capital Markets technology analyst Paul Mason said he was “neutral” on the new shares.

“Overall we see the transaction as neutral for Superloop, as the use of funds appears to be for general purposes as opposed to a specific transaction or capex program,” he said.

Last September, Superloop reportedly raised $65 million in just one hour, with analysts and investors excited with its business model targeting corporate data centre needs rather than consumer mobile and broadband demands.

Serial entrepreneur Slattery previously launched Megaport, Pipe Networks and data centre provider NextDC. Superloop was formed in late 2014 after Megaport divested out its physical assets. Megaport is now a purely software-defined bandwidth provider that allows customers to dial up and down capacity on demand.

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