The Digital Wine Ventures Ltd (ASX: DW8) share price is dipping during mid-morning trade. This comes after the wine-focused technology investment company provided an update on its capital raising efforts last night.
At the time of writing, Digital Wine shares are 1.67% lower at 6 cents apiece. In comparison, the All Ordinaries Index (ASX: XAO) is hovering 0.28% higher to 7,712 points.
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What did Digital Wine announce?
According to the update, Digital Wine advised it has opened up a Share Purchase Plan (SPP) following a successful placement.
On October 15, the company revealed that it has received overwhelming support to raise $12.625 million via a share placement. The firm commitments came from institutional, sophisticated and professional investors.
About 225.45 million shares will be issued at a price of 5.6 cents per share. This represents a 15.2% discount to the last traded price of 6.6 cents before the announcement on 12 October.
Furthermore, Digital Wine directors also subscribed for an additional 2.23 million shares at the same price offered. However, this is pending shareholder approval at an Annual General Meeting (AGM) to be held in the near future.
The company decided to allow its remaining shareholders to participate in a $2 million SPP based on the same terms.
Eligible investors will be able to apply for up to a maximum amount of $30,000 worth of new shares.
The closing date for the SPP will fall on 26 October and the results will be announced on 2 November.
The funds raised under the placement will be used support the acquisition of leading wholesale alcoholic beverage platform company, Kaddy. This includes the following:
- $6.75 million to fund the cash consideration for the acquisition of Kaddy;
- $5.3 million for expansion capital for the Kaddy marketplace; and
- $0.70 million in capital raising costs.
The monies collected from the SPP, however, will be allocated towards extra sales and marketing activities and general working capital.
About the Digital Wine share price
Over the past 12 months, Digital Wine shares have rallied around 15% higher, reflecting modest investor sentiment. However, since the start of 2021, the company's share price is up almost 40% alone.
On valuation grounds, Digital Wine presides a market capitalisation of roughly $112.9 million with approximately 1.8 billion shares outstanding.
