It’s been a bumpy day of trading for cybersecurity company Tesserent Ltd [ASX:TNT]. The ASX TNT share price had been in a trading halt since last Friday.
Now though, with investors free to buy and sell once more, the reaction has been fairly negative. At the time of writing the TNT Share price is down 6.38% due to the revelation of a fresh share placement.
Let’s take a closer look at the details…
$25 million to grease the wheels
Tesserent revealed this morning that it has managed to raise $25 million from this placement. Turning to institutional and sophisticated investors for the funds.
As for the terms of the placement, it will result in the issue of 119 million new shares. Each of which was offered and snapped up for 21 cents per share. A decent discount compared to the stocks previous close of 24 cents, last Thursday.
Needless to say, this dilution of shares is the main reason for the stocks slide today.
However, management is clearly adamant that these funds will help Tesserent reach its growth goals. Particularly when it comes to some recent and planned acquisition deals. A strategy that has certainly been working for the company to date.
Because as today’s announcement makes a point of noting:
‘Importantly, none of the cash raised is required for operational cash flow as the business has been generating positive operational cash flows since January 2021.’
A clear silver lining to this whole situation that shareholders should be pleased to hear.
All management needs to do now is maintain this momentum. Merging these new and forthcoming acquisitions into the same cash flow positive operations.
After all, in order to keep growing Tesserent needs to increase the scale of its operations. Something that they’re clearly looking to fast-track with these acquisitions. Co-CEO, Julian Challingsworth, makes that abundantly clear with his own comments:
‘We are pleased at the success of this equity raising to support the enhancement of our core capabilities and operational footprint in strategic high growth locations with a focus on the federal government market.’
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What’s next for the Tesserent Share Price?
In terms of when the actual placement will be settled, Tesserent has stated that it should be finalised by this Friday, 1 October. Allowing the new shares to be issued and traded by next Monday, 4 October.
A quick turnaround that may see some further volatility in trading over the coming days.
Beyond this though, the real focus for management is almost certainly the aforementioned growth strategy. Looking to assimilate some of its recent takeover targets, and possible prepare for new deals to come.
So, for existing shareholders this is certainly something to keep an eye on. Particularly as management will want to demonstrate that this capital injection will be put to good use.
Time will tell if they can deliver…
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Because in the midst of this volatile market, you have to seize your opportunities when you can. Just like Tesserent has done with this placement.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
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