ESG has raised £19m through a placement of 304,000,000 new ordinary shares at 6.25p/share. It will focus on funding its share of an expected capital raising by the HomeSend JV and helping position the core business for sale.
It raised £13.85m through firm placing, £3.92m through institutional offers and £1.23m through clawback placing. It plans to spend £16.25m to fund 35.69% of HomeSend JV’s expected €50.0m capital raising (to increase on boarding capabilities from 16 banks to 48 banks per annum). It also plans to spend £1.9m on positioning the core business for sale.
The company is also in discussions with a small number of interested parties to sell its core business (update expected to the market within eight weeks), which is anticipated to return to growth this year. The core business achieved a €6.0m reduction in cost base from FY17, resulting in a current annual breakeven run rate of €11.0m-11.5m. The board expects to report recurring revenue of €5m in FY19 and a backlog of €5m-7m.
John Conoley, ESG’s Executive Chairman, commented: “The Capital Raise underpins an acceleration in expected bank customers live on the network in H2 2018 onwards.”