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Shares in mobile payments group Bango (LON:BGO) strengthened after it revealed its finances had been bolstered by a successful £11mln equity funding.
Bango said the proceeds are earmarked for sales and marketing, with a view to grow market share among leading app stores, as well as increased research and development spending.
The company wants to extend the different methods of payment available to app stores, it added.
Cash from the share sale will also support working capital whilst the group works towards profitability.
“Bango's partners, and potential partners, are predominantly large multi-national companies who value balance sheet strength,” it said in a stock market statement.
“The directors believe that Bango's attractiveness and negotiating position with such companies will be enhanced if it demonstrates that it is well capitalized throughout its period of growth and is able to maintain the independence of its platform.”
Bango is issuing a total of 12.22mln new shares each priced at 90p, a small discount to Tuesday’s closing price of 93p.
Investors appeared to welcome the funding news as the share price actually rose 5p, 5.4%, to trade at 94p each, despite the pending equity dilution.
The placing is to be staggered, with an initial 944,000 new shares admitted to trading on November 16, and the remainder will be conditional upon a shareholder vote at a November 30 EGM. It is anticipated that the second tranche of shares will be admitted on December 1.
Ray Anderson, Bango chief executive, highlighted that the funding was supported by “top-tier” investors.
“The industry is now seeing the benefits of direct carrier billing, and greater demand for this method of payment comes at a time when Bango is the definitive market leader,” he added.
“The conditional placing announced today will see great returns as Bango activates further End User Spend in valuable markets around the world."
Direct carrier billing allows purchases to be added to customers’ mobile phone bills.