The Megaport Ltd (ASX: MP1) share price has returned from its trading halt and dropped lower on Friday.
At the time of writing the leading elastic interconnection services provider's shares are down 1% to $9.06.
Why is the Megaport share price trading lower today?
Megaport's shares have come under a little bit of pressure today after announcing the successful completion of its underwritten share placement to institutional, sophisticated, and professional investors.
According to the release, Megaport successfully raised $62 million through the issue of 7.1 million shares at $8.70 per share. This represents a discount of 4.8% to Megaport's last close price.
Unlike Bubs Australia Ltd (ASX: BUB), which also completed a placement today, there will be no accompanying share purchase plan for retail investors.
Why did Megaport raise funds?
Megaport advised that the proceeds will be used to accelerate its expansion to new locations and new markets.
It will also use them to undertake capacity upgrades, fund innovation and development of new technology, and for operating costs and general working capital requirements.
Megaport's chief executive officer, Vincent English, was very pleased with the outcome of the placement.
He said: "We are very pleased with the continued support of our investors as Megaport further consolidates its first mover advantage through accelerated expansion and investments in innovation. We continue to see significant opportunity ahead of us, and this capital raising, along with the funds raised in March of this year, will allow us to accelerate our pursuit of this opportunity."
The chief executive expects the placement to put Megaport in a position to accelerate its revenue and market share.
"This Placement will enable Megaport to accelerate expansion in both core and new markets, and accelerate revenue and market share through workforce alignment, while furthering innovation in the product suite to broaden the service offering and deepen end-to-end integration with providers to enhance customer experience. The Placement will also accelerate the expansion of the Megaport Interconnection Platform including MCR into more locations and more markets globally," he concluded.
