archTIS Ltd (ASX:AR9, OTCQB:ARHLF) has wrapped up the institutional component of its $20.5 million equity raising, securing $8.7 million from a placement and fully underwritten entitlement offer to accelerate its US growth strategy and fund the acquisition of key assets from US data security firm Spirion LLC.
The capital raising follows Wednesday’s announcement of the Spirion transaction — a A$15.7 million deal that archTIS says will materially expand its North American presence and boost its annual recurring revenue.
Read more: archTIS accelerates US expansion with Spirion acquisition and capital raise
Strong institutional demand
The institutional entitlement offer, fully underwritten by Henslow and Canaccord Genuity, raised A$5.2 million from the issue of around 34.9 million new shares. A further A$3.5 million was secured via the placement of about 23.3 million shares.
Shares were issued at A$0.15 each, representing an 18.9% discount to archTIS’ August 25 closing price. Both existing institutional investors and new domestic and offshore funds participated, highlighting strong demand for the company’s growth strategy.
“We are delighted with the strong support shown by both existing and new institutional investors,” said archTIS managing director Daniel Lai.
“This is a clear endorsement of archTIS’ strategy, the Spirion Acquisition, and our growth vision in the US and globally,” he added. “The proceeds provide the capital required to fund this transformational transaction, retain key talent and accelerate execution of our growth initiatives.”
Settlement of the new shares is due on September 2, with quotation to follow on September 3.
Retail offer to follow
Attention now shifts to the retail entitlement offer, which opens on September 2 and closes on September 11. It is expected to raise a further $11.7 million through the issue of around 78.2 million shares, also priced at $0.15 each. Eligible shareholders in Australia and New Zealand will be able to take up their entitlements and apply for additional shares.
If fully subscribed, the combined raising will generate about $20.5 million before costs.
Funding a US push
Proceeds will be used to complete the Spirion acquisition and support integration, staff retention, product development, and marketing initiatives.The Spirion deal marks a step-change in archTIS’ US ambitions, adding $17 million in annual revenue, more than 150 enterprise, government, and education clients, and 38 employees including senior executives. Spirion’s chief executive Kevin Coppins will join archTIS as executive vice president of a new commercial enterprise solutions division.
The acquisition builds on recent momentum into the US, including a major NC Protect software contract with a US Department of Defense contractor announced in June.
Read more: archTIS secures milestone US Department of Defense contract for NC Protect
archTIS expects cross-selling opportunities across its ABAC (attribute-based access control) platform and Spirion’s sensitive data discovery and classification technologies, creating a comprehensive Zero Trust suite.