{"id":3691,"date":"2019-09-18T12:27:48","date_gmt":"2019-09-18T01:57:48","guid":{"rendered":"https:\/\/strawman.com\/blog\/?p=3691"},"modified":"2019-09-18T14:13:29","modified_gmt":"2019-09-18T03:43:29","slug":"livetiles-lvtasx-is-raising-capital-what-should-shareholders-do","status":"publish","type":"post","link":"https:\/\/strawman.com\/blog\/livetiles-lvtasx-is-raising-capital-what-should-shareholders-do\/","title":{"rendered":"LiveTiles (LVT:ASX) is raising capital: what should shareholders do?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Last week we noted how <strong>LiveTiles <\/strong>(ASX:LVT) <a href=\"https:\/\/strawman.com\/blog\/why-are-livetiles-lvtasx-shares-falling\/\">waning cash balance<\/a> was impacting investor sentiment and how the company may soon need to seek additional funding.  <\/p>\n\n\n\n<p>So it&#8217;s come as little surprise that the company has today announced a capital raise. The question, of course, is whether it represents a good deal for shareholders.<\/p>\n\n\n\n<p><strong>What does LiveTiles do?<\/strong><\/p>\n\n\n\n<p>Livetiles targets mid to large organisations moving from traditional code heavy digital workplaces to drag and drop, customisable and machine learning oriented intranet software. The business has grown Annual Recurring Revenue (ARR) from $4 million to over $40 million in the last two years. <\/p>\n\n\n\n<p><strong>What does the raise involve?<\/strong><\/p>\n\n\n\n<p>Livetiles announced a placement of up to $50 million to sophisticated and professional investors, and a Share Purchase Plan to existing shareholders capped at $5 million.  Investors can apply for shares at 35c each, a 12.5% discount to the most recently traded price.  <\/p>\n\n\n\n<p>Given their current cash position of $14.9 million, and most recent quarterly cashburn of $6.2 million, it would appear this raise will last them quite some time &#8211; at least 10 quarters under the current rate of cashburn (although likely much more if this continues to improve). <\/p>\n\n\n\n<p>The new settled shares are expected to be available for normal trading by the 24th of September.<\/p>\n\n\n\n<p><strong>What kind of dilution are we going to see?<\/strong><\/p>\n\n\n\n<p>With a pre-raise market cap of ~$260 million, this is a substantial raise and could result in substantial dilution for shareholders &#8212; up to 21.6%.<\/p>\n\n\n\n<p>The current 6.6x ARR multiple is now going to stretch to about 7.9x given the inflated market capital. That may make short term gains more difficult, but if the new funds can accelerate growth it will ultimately prove justified. <\/p>\n\n\n\n<p><strong>Where to from here?<\/strong><\/p>\n\n\n\n<p>With a strengthened balance sheet, LiveTiles will be better placed to prosecute its growth ambitions. It should see them through to breakeven provided the funds are well managed. Whether or not shareholders benefit depends entirely on how well the money is invested.<\/p>\n\n\n\n<p>Given the historical return on customer acquisition costs, shareholders certainly have cause for optimism. We&#8217;ll get more insight at the next quarterly update in October&#8230; <\/p>\n\n\n\n<p>Click below to see the community target price and research on LiveTiles.<\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-secondary-background-color\" href=\"https:\/\/strawman.com\/member\/company\/forecasts\/LVT\">Click here for LiveTiles (ASX:LVT) share price &amp; research<\/a><\/div>\n\n\n\n<p class=\"has-text-color has-background has-very-dark-gray-color has-very-light-gray-background-color\"><em>Strawman is Australia&#8217;s premier online investment club. Join for free to access independent &amp; actionable recommendations from proven private investors.<\/em><\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-text-color has-very-light-gray-color has-background has-tertiary-background-color\" href=\"https:\/\/strawman.com\/member\/landing\/signup\">Register for free ASX recommendations<\/a><\/div>\n\n\n\n<p><em><strong>Disclaimer\u2013<\/strong> The author may hold positions in the stocks mentioned in this publication, at the time of writing. The information contained in the publication and the links shared are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. For errors that warrant correction please contact the editor at admin@strawman.com.<\/em><\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p style=\"text-align:center\" class=\"has-text-color has-cyan-bluish-gray-color\">This Service provides general financial advice only, and has not taken your personal circumstances into account. Strawman Pty Ltd operates under AFSL 501223 . For more information please see our <a href=\"https:\/\/strawman.com\/member\/landing\/terms\">Terms of use<\/a>. Please remember that share market investments can go up and down and that past performance is not necessarily indicative of future returns. Strawman Pty Ltd does not guarantee the performance of, or returns on any investment.<\/p>\n\n\n\n<p style=\"text-align:center\" class=\"has-text-color has-cyan-bluish-gray-color\">\u00a9 2019 Strawman Pty Ltd. All rights reserved.<\/p>\n\n\n\n<p style=\"text-align:center\">| <a href=\"https:\/\/strawman.com\/member\/landing\/privacy\">Privacy Policy<\/a>&nbsp;|&nbsp;<a href=\"https:\/\/strawman.com\/member\/landing\/terms\">Terms of Service<\/a> | <a href=\"https:\/\/strawman.com\/member\/landing\/fsg\">Financial Services Guide<\/a> | <\/p>\n\n\n\n<p style=\"text-align:center\" class=\"has-text-color has-cyan-bluish-gray-color\">ACN: 610 908 211 | Australian Financial Services Licence (AFSL): 501223<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A chance to top up, or good money after bad?<\/p>\n","protected":false},"author":13,"featured_media":3692,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3691","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>LiveTiles (LVT:ASX) is raising capital: what should shareholders do? 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