Skydive the Beach (ASX:SKB) announced the successful completion of the institutional component of the entitlement offer. The company intends to raise a total $19.6m. The institutional component raised $18.6m in a “strongly supported institutional share placement”.
Skydive the Beach offered new shares at an issue price of $0.30 in a fully underwritten 2 for 9 entitlement that enables existing shareholders to purchase two shares for every nine they already own. The company states in an announcement to the ASX that the offer was well supported by existing shareholders, with strong interest from new institutions.
On 12 October Skydive the Beach announced the acquisition of Skydive Queenstown, New Zealand’s leading tandem skydiving group which has a 33% market share in the domestic market. Skydive Queenstown generated revenue of $10.4m and underlying EBITDA of $3.4m during FY14. The acquisition provides the Australian company with a growth opportunity in the New Zealand market and is expected to be earnings accretive as soon as completed.
Skydive the Beach experienced a strong debut on the ASX after a successful IPO in March 2015. Since then the stock has been hovering steadily around the 30c mark amid bearish market conditions on the ASX.
Earlier this month the company upgraded its FY16 EBITDA guidance from $10.9m to $11.5m which is now expected to be $13.5m following the successful acquisition. Revenue is expected to be $54.9m which would be a 110% increase on FY15.
SKB offers profitable exposure to the leisure services industry. We are attracted its growth trajectory and market position following IPO. Sales and earnings have increased for the past three consecutive years, driven by concurrent passenger growth. Whilst the integration of the recent acquisitions creates operational risks, there is no guarantee that a self-funding position can be sustained.
Wise-owl is keeping an eye on SKB and will inform subscribers about any investment opportunities.