Cloud hosting business raises £11m through Placing and Subscription offers

Cloud hosting business, SysGroup, has raised £11m through a conditional oversubscribed Placing and Subscription announced last night after the stock exchange had closed.

The Placing has conditionally raised gross proceeds of £8.9m through the placing of 26,939,427 new Ordinary Shares to certain institutional and other investors.

The Subscription has raised a further £2.1m through the subscription of 6,242,423 new Ordinary Shares by directors, a PDMR and certain sophisticated investors directly with the company, in each case at the issue price of 33p per share.

Shares in SysGroup, which has offices in Bristol, Edinburgh, Liverpool, London, Manchester and Newport, were priced at 35p per share when the stock market closed last night.

In addition to the Placing and Subscription, the company is providing all shareholders with the opportunity to subscribe for an aggregate of up to 1,515,151 Retail Offer Shares at the issue price, to raise up to approximately £0.5m.

No part of the Placing or Subscription is conditional on the Retail Offer proceeding or on any minimum take-up on the Retail Offer.

It is expected that admission to the stock exchange will occur, and that dealings will become effective on or around 8:00 a.m. on Wednesday, June 26. The Placing Shares, the Subscription Shares and the Retail Offer Shares – together, the ‘Fundraising Shares’ – will be issued fully paid and will rank pari passu in all respects with the company’s existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares.

Heejae Chae

Chief executive, Heejae Chae, said: “We are pleased with the level of support from our existing shareholders and are delighted to welcome a number of new investors to the register who share our vision for the business in its next stage of growth.

“We trust that the Retail Offer provides smaller shareholders the opportunity to participate, also.”

Approximately £2m of the proceeds of the Fundraising is intended to be used to fund an internal transformation project to provide the group with systems utilising AI-driven technologies.

This will enable the company to be a true AI adopter and innovator, acting as a live real case study of best practice to customers.

Rather than drawing the group’s existing bank facility, a further £2m will be used to meet the contingent earnout payment due in August 2024 in relation to the acquisition of Truststream Security Solutions. The remainder of the Fundraising proceeds will strengthen the balance sheet to provide for ongoing working capital requirements as the business continues to drive growth, as well as liquidity for M&A opportunities, while ensuring that the company remains compliant at all times with its obligations under its existing financing arrangements.

SysGroup directors are of the opinion, having made due and careful enquiry, that, taking into account the anticipated net proceeds of the Placing and Subscription and the existing cash resources available to the company, it has sufficient working capital for its present requirements, that is for at least 22 months from the date of admission.

Each of the directors and company secretary have subscribed for New Ordinary Shares pursuant to the Fundraise.

It leaves Chae with a 14.7% shareholding in the company currently, and a 9.2% shareholding of the enlarged share capital.

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