IQGeo Group PLC (LON:IQG) has unveiled plans to raise around £5.3mln through a placing and a direct subscription by directors of the company to help fund its acquisition of US-based geospatial software firm OSPInsight International Inc (OSPI) for up to US$8.75mln (£6.5mln).
The software firm said the placing and subscription of shares will be priced at 78p each, equal to its closing price on Monday, and will be conducted through an accelerated bookbuild by broker finnCap. IQGeo added that the acquisition of OSPI is conditional on completion of the fundraising.
The company said the purchase of OSPI will comprise an initial cash payment of US$5.6mln and the issue of shares in IQGeo with a value of US$1mln. The remainder of the sum will be a deferred or earn-out consideration and will be settled in equal parts cash and new shares.
IQGeo said the acquisition will expand its intellectual property in the “technically complex area of network design, splice design and detailed record keeping” which will, in turn, accelerate its own development of a “market-leading system of record for large customers”. The merger will also add 200 customers to IQGeo’s books.
“The acquisition of OSPInsight significantly expands our user base providing us with a materially enlarged and loyal market for new product subscriptions. Additionally, it provides us with a highly complementary product giving us access to the attractive alternative fibre ISP and private network operator markets which have been under-served by the geospatial incumbents”, IQGeo chief executive Richard Petti said in a statement.
“With the complementary technology and enlarged customer base, the OSPInsight acquisition strengthens our competitiveness, diversifies our revenue streams and strengthens our financial position. We look forward to welcoming OSPInsight to the IQGeo Group”, the CEO added.
In a note on Tuesday, analysts at house broker finnCap initiated coverage on IQGeo with a 110p target price, saying the OSPI acquisition is a “complementary fit in both product suite and user base” and will “accelerate the scale-up, speed to profitability and cash generation” of the business.
IQGeo shares rose 3.9% to 81p in early trading.