IT and telecommunications provider, Inabox Group (ASX:IAB), has raised $4 million in capital for the payment of short-term debt associated with the recent acquisition of Hostworks Group, which cost $7 million, and to further the company's plans for further acquisitions.
In a statement on the ASX, the company said the $4 million was raised via a private placement.
Inabox Group bought Hostworks Group from BAI Communications on 3 February, in a move aimed at strengthening its cloud offering.
The $7 million purchase of the digital media solutions business saw Inabox yield strategic business synergies and cross-selling opportunities, with the company gaining access to Hostworks' large enterprise customers such as Seek, Carsales, Ticketek, Foxtel, AHL and Seven Media.
Additionally, the deal enabled Inabox to leverage Hostworks' cloud infrastructure along with its existing relationships with key vendors, spanning AWS, Microsoft Azure, IBM Softlayer and Google Cloud Platform.
And the company is on a lookout for more businesses to acquire.
“The capital raised will enable Inabox to pay down short-term debt associated with our successful acquisition of Hostworks. It also provides funds which can be used for further earning-accretive acquisitions,” Inabox Group CEO, Damian Kay, said.
“All acquisitions will continue to fit within our vision of being a leading managed IT, cloud and communications provider to the SME, corporate and consumer brands. This means we will look to acquire businesses in the cloud, managed IT and communications space.”
Kay also said potential security players and Unified Communications companies will be of interest.
“Driving the organic growth is key as well – our investment strategy will continue to be made in areas that take us further up the value chain. Significant investment in our Unified Communications offering for our 400-plus strong channel partners has been testament to this.
“In addition to acquisitions, a decent part of the funds raised will be used to pay short-term debt related to the Hostworks acquisition – allowing us to free up the balance sheet and giving us a war-chest to pursue highly accretive acquisition opportunities when they are arise,” he added.
Under the capital raise placement, 3.63 million fully paid ordinary shares will be issued at $1.10 per share, a decrease of 14 per cent to the last traded price.
Inabox obtained shareholder approval to issue shares under Rule 7.1A, which represent a dilution to existing shareholders of 0.57 per cent. The total fee payable to the lead manager in respect of these shares will be $7488.
The company mentioned that the placement has received “strong support” from new and existing shareholders, including institutional funds and investors.
In August last year, Inabox Group posted an $859,000 profit for FY16, an increase of 344 per cent from the previous financial year. Its EBITDA hit $5.5 million, exceeding guidance from the company, and was more than double EBITDA in FY15, which was $1.8 million.
At the time of writing, Inabox’s shares were trading at $1.28.