Serko eyes growth and acquisitions

Serko co-founder and chief strategy officer Bob Shaw (left), chairman Simon Botherway and co-founder and chief executive Darrin Grafton. Photo / File

Serko plans to raise $15 million selling shares at a 3.2 per cent discount to institutional investors to speed up its growth trajectory having already raised revenue guidance.

The Auckland-based online travel booking software developer will sell 5.5 million shares, or about 7.3 per cent of the company, at $2.75 apiece to investors in a fully underwritten placement, it said in a statement.

The funds raised will go towards bolstering working capital, which it said will give it more flexibility to speed up organic growth and close potential acquisitions.

Those funds will support "undertaking investments to drive revenue growth such as establishing sales and support functions in new international markets" and "accelerating product development and integration of local content and functionality in international markets which are required in order to appeal to a wider range of travel management companies (TMCs) and corporate users," it said.

The placement, which is underwritten by Deutsche Craigs, comes just a week after Serko raised its revenue expectations for the year ending March 31, 2019 for sales growth of 20-to-30 per cent on 2018's $18.3m. It had previously predicted sales growth of 15-to-30 per cent.

Serko posted its maiden profit in 2018 and has started expanding into the Northern Hemisphere where it sees new opportunities. Its shares have been in uncharted territory as investors were impressed by the successful execution of its plans last year, rising 30 per cent so far this year which has seen it complete a secondary listing on the ASX.

The company today said the funds raised could go towards acquisitions, which it would want to "deliver additional customers, development capability and in-market infrastructure, facilitating and enhancing the pace of Serko's expansion into new geographies".

Shares of Serko have been halted for the placement and are expected to resume trading tomorrow.

The company held cash and equivalents of $5.2m as at March 31, generating a positive operating cash flow in the year of $1.4m, compared to an outflow of $1.6m a year earlier.

The board has a policy of maintaining strong cash reserves and in its annual report, said directors would "monitor Serko's capital requirements in light of the funding needed to execute growth opportunities both organic and inorganic.".