Megaport set to raise $60M for network and tech innovation

Megaport set to raise $60M for network and tech innovation

Founder Bevan Slattery will sell down a portion of his shareholding

Bevan Slattery (Megaport)

Bevan Slattery (Megaport)

Network-as-a-service provider Megaport is seeking to raise up to $60 million that will be put towards network expansion and technology innovation.

The Australian Securities Exchange listed company plans to raise up to $50 million via issuing 12.5 million shares under a placement at $4 per share, and an extra $10 million through a share purchase plan.

As part of the transaction, Megaport founder Bevan Slattery will sell down a portion of his shareholding -- offering about five million shares to help improve liquidity, seeing him retain 16.3 per cent in Megaport shares.

The capital raising will be put towards expanding into new locations and markets, upgrading its capacity, as well as funding innovation and development of new technology, the company told shareholders.

Specifically, it will look at investing into innovative new services and capabilities to make data flow automatically and seamlessly between locations, services, supply chains and customers.

It also aims to achieve greater ecosystem density and choice through software integration and interconnection with service providers; and ensure its services-neutral platform is positioned for growth in line with increasing data consumption.

Megaport will continue its investment and focus on various channels to support increased sales activities.

All up, the company will have raised $120 million within 12 months. At the same time last year, Megaport embarked on another $60 million capital raising effort to upgrade its network capacity and accelerate expansion to new locations and markets.

Currently, Megaport connects more than 1,350 customers globally across 400 data centres, and has partnerships with Alibaba Cloud, Amazon Web Services, Google, IBM, Microsoft Azure, Nutanix, Oracle and Salesforce.

In January last year, the company launched its Megaport Cloud Router (MCR), which currently provisions 116 MCRs.

“MCR-enabled customers use over 60 per cent more services as a result of its capability to unlock use cases like cloud-to-cloud, hybrid cloud connectivity, and virtual points of presence,” Megaport CEO, Vincent English, said in February. 

“Combined with our integrations with 115 cloud onramps, Megaport is driving further cloud adoption in the IT services space. 64 per cent of the connections on Megaport’s software defined network are to cloud service providers.”

The capital raising initiative comes as Megaport posted FY19 half-yearly net profit losses of $16.6 million for the six months ending December 2018, following the roll-out of additional data centres, network expansion plus software and product development.

Due to increased usage from across these markets, Megaport’s revenue rose 72 per cent - from $8.8 million to $15.2 million - over the previous corresponding period.

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