Defence Holdings PLC (LSE:ALRT) shares fell 7.3% to 1.13p in early trading on Friday after the defence technology group completed a heavily discounted £4 million fundraising to support expansion and new partnerships.
The software-led defence company raised the money through a placing of 400 million new shares at 1p each, a 24.8% discount to Wednesday's closing price of 1.33p.
The company said the placing was "significantly oversubscribed" and attracted "strong participation byinstitutional investors".
Proceeds from the fundraising will be used to fund working capital and support strategic partnerships and joint ventures across the defence sector, as well as help execute the company's recently announced operating model and strategic plan.
Chief executive Andrew Roughan said the additional capital would allow Defence Holdings to "accelerate execution of our strategic playbook, pursue further high-value opportunities across our defence portfolio and deepen our participation in the UK and European defence technology ecosystem".
The company has also indefinitely suspended its at-the-market share issuance programme, which had raised almost £1 million since its launch in October last year.
Following admission of the new shares on 1 July, Defence Holdings will have 2.87 billion shares in issue, meaning at the current price, it would have a market capitalisation of roughly £32.5 million.
The fundraising comes as investors continue to pour money into European defence companies amid increased military spending and renewed focus on regional security capabilities.
Defence Holdings was created last year after Guild Esports became a cash shell, called Cassel Capital, setting out ambitions to build a software-led defence technology group focused on drones, artificial intelligence and critical infrastructure protection.
The company has since signed a partnership agreement with AI infrastructure specialist Whitespace and strengthened its board and management team with a series of senior defence appointments, including former chief of the defence staff Field Marshal Lord Houghton of Richmond as chairman and former Plexal boss Roughan as CEO.
