Online surf retailer SurfStitch is raising $40 million from institutional and retail investors to fund strategic acquisitions, including a surf weather site and a global online news magazine.
Combined, the businesses attract more than 2.75 million unique monthly visitors to their websites, with between 90% and 95% of those returning within 7 days.
The acquisitions will form part of a newly formed content network, along with The Lens, to provide a platform for brands and consumers to engage in an authentic and curated action sports environment.
The founders of Magicseaweed and Stab Magazine will stay to help drive the Surfstich’s new content group.
“[It will] represent a digital ecosystem capable of capturing and influencing customers at all points of the surf and action sports lifestyle cycle,” the company said.
Under the capital raising, $37.5 million will be sought from institutional investors at $1.50 a share. Another $5 million will come from retail shareholders, capped at $15,000 per shareholder.
“SurfStitch’s demonstrated global leadership in action sports and youth culture apparel is greatly enhanced with the addition of Magicseaweed and Stab Magazine,” says SurfStitch CEO Justin Cameron. “These highly complementary acquisitions represent the voice of SurfStitch’s core audience, connecting us with our customers and providing us greater insight into their preferences, influences and purchasing behaviour.”
The company’s shares are in a trading halt until Thursday’s opening. Shares last traded at $1.55.
In April, the company announced the early completion of its global integration plans for the European region and increased its EBITDA guidance for the 2015 financial year to $7 million from $5.1 million.
Late last year SurfStitch raised $65 million from a group of Australian and offshore institutional and sophisticated investors. It used the investment to acquire a holding in Billabong and 100% of the USA-based e-commerce action sports business, Swell.com.
SurfStitch was launched out of a garage in Sydney’s Northern Beaches by founders Justin Cameron and Lex Pedersen in 2007.
Since then the business has become a cornerstone of the Australian surfing industry, growing its operations to across Australia, the UK and North America.
It employs over 400 people globally, and stocks more than 600 brands on its site.
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