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Grafenia looks to raise £28m to fund ambitious growth plans


Manchester software group Grafenia plans to raise £28m via a placing and subscription offer at 8.5p per share, plus approximately £4.9m via an open offer to qualifying shareholders.

The issue price represents a discount of 17.1 per cent to the group’s closing mid-market price of 10.25p per ordinary share on 25 August.

Grafenia plans to use the fresh funds to pay £3.4m deferred consideration on previous buys, repurchase some of its existing bond arrangements, and to continue its acquisition strategy.

Last year the company sold its Manchester production facility, Works Manchester Limited, to focus on acquiring vertical market solutions software businesses, and made four acquisitions in the year to March 31.

It has also posted sales up 1.5 per cent at £12.55m and EBITDA from continuing operations of £410,000 (2022– £170,000) for the same year. The bottom-line loss was £1.61m, which included around an £800k write-down related to the Works Manchester sale.

The company added in a statement to the LSE: “Grafenia, historically, has been known predominantly within the graphics sector. Over the years, moving from a franchise model with to a software licensing model with Nettl.

“In both cases, the ‘secret sauce’ was always the software. We’ve built software for many years. It runs our Nettl Systems business and we licence it around the world.

“The first step in the transition was the sale of our production facility, Works Manchester Limited. That moved our business away from asset-heavy manufacturing, enabling us to focus on software and systems.

“What that meant was our Nettl Systems business became a software operation, with a significantly reduced cost base. But as a group, we became smaller as a result of the divestment, with the same central costs. Growing the size of the group, faster, became the priority. Since then, we’ve doubled down on our acquisition strategy with the aim of achieving that growth.

“To date, we’ve utilised our bond facility to fund the acquisitions. During FY23 we issued £11.2m of bonds, at nominal value, raising £9.5m before expenses. We deployed £9.6m of capital, including deal costs.”

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