Shares in Ondo InsurTech PLC (LSE:ONDO) tumbled 17% to 25.02p this morning after the company unveiled plans to raise at least £2.2 million through a discounted equity issue.
The London-listed group, which provides leak-prevention technology to home insurers, said it intends to raise £1.44 million via a placing of new shares, with a further £760,000 to come from a direct subscription.
A separate retail offer for existing shareholders will open later this week. All new shares will be issued at 25p, a 17.4% discount to last Friday’s close.
Ondo said the fresh capital will be used mainly to accelerate its expansion in the United States, including building out its network of partner plumbers and completing the development and commercial launch of its “all-climate” LeakBot Edge device.
The placing will be carried out through an accelerated bookbuild led by Dowgate Capital.
Several directors intend to take part, committing a combined £90,000. The raise also includes a strategic investment from Indiana Farm Bureau Insurance, one of Ondo’s largest US customers, which has agreed to buy just over 3 million shares.
Completion of the placing and subscription is contingent on the new shares being admitted to trading on 8 December, with a longstop date of 31 January.
Ondo said the retail offer, due to open on 4 December, is intended to give existing shareholders the chance to participate on the same terms, though it is not guaranteed to be fully subscribed.