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magazineA £20m cash injection gives Marlowe power to do more deals
Marlowe (MRL:AIM) 510p
Gain to date: 19.7%
Original entry point: Buy at 426p, 28 June 2018
The fire and water safety expert has raised £20m to help fund new acquisitions. The money came from issuing new shares at 475p which was a 9.1% discount to the closing mid-market price on the day before the fundraise was announced.
Investors should note that share placings are likely to be fairly frequent with Marlowe as it operates a buy and build model. Issuing new stock at a discount is a way of getting institutional investors to back the company’s plans and give them a reward by having stock cheaper than they could get on the market.
Companies often unveil an acquisition immediately after raising new cash but Marlowe’s fundraise looks to have been an opportunistic move off the back of a very strong share price run since its full year results in June.
In Marlowe’s case, it didn’t announce a new deal. It has previously told Shares that it wants to move into refrigeration and air conditioning.
Finance director Mark Adams said to us last month that it could fund bolt-on acquisitions simply by accessing existing debt facilities rather than issuing new stock. This implies the £20m placing could be a precursor to a much larger deal, albeit this is pure speculation.
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