The ASOS plc (LON: ASC) share price spiked 8.35% higher after completing the placing of new ordinary shares worth £75 million, whose proceeds will be used to support the Driving Change agenda. The ultimate goal of the capital raise is to return the company to sustainable profitability in the second half of 2023 and beyond.
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A crucial component of the Driving Change agenda is that the company must maintain a robust and flexible balance sheet. Therefore, the move will also be combined with new financing arrangements, as explained in the press release of 25 Mat 2023.
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The new strategy provides financial flexibility and creates a robust baseline for ASOS to continue executing its strategy and plans to continue growing. In addition, as yesterday’s press release explained, the capital raise also included a retail offer conducted via the PrimaryBid platform.
The retail offer is still open to allow retail investors ample time to participate in the capital raise. The company intends to announce the total number of shares retail investors buy after the offer closes. There was a minimum subscription amount of £250 per investor under the terms of the Retail Offer.
ASOS shares fell heavily earlier this month after releasing its first-half financial results, indicating a sharp revenue decline. The company’s margins have also shrunk as competition from firms such as Vinted has forced it to lower prices.
The online fashion and cosmetic retailer saw its revenues decline to £1.8 billion in six months to February, marking an 8% decline year on year. The latest fundraise saw some institutional investors participate, including Camelot Capital Partners, which subscribed for 3,946,424, placing shares worth about £16.5 million.
Luckily, retail investors applying through the PrimaryBid platform will not be charged a fee for the transactions, and they can even apply through their retail broker or wealth manager using their ISA, SIPP or GIA.
*This is not investment advice.
ASOS share price.
The ASOS share price edged 8.35% higher to trade at 456.8p, from Thursday’s closing price of 421.6p.
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