Bubs Australia has announced a $63 million capital raise as it seeks to power unexpected growth in the US market and scale up local manufacturing to meet demand.
The infant formula maker went into a trading halt on Tuesday to allow for the equity raising to take place, which consists of a $32.4 million institutional placement and a $30.6 million entitlement offer.
Bubs Australia chief executive Kristy Carr: the infant formula maker is seeking a $63 million capital raising.Credit:Chris Hopkins
The equity raising is expected to raise 121.2 million new shares, or 19.8 per cent of Bubs’ existing shares, at $0.52 per share, which is an 18.8 per cent discount on the price of $0.64 when Monday trading closed.
An investor presentation on the capital raise revealed $18 million of the $63 million will be used to “assist with the immediate scale up of group activities” amid the unexpected demand from the US.
The country’s infant formula shortage has fast-tracked its progress in the US market by 18 months, according to Bubs founder and CEO Kristy Carr.
“This is now set to be a significant revenue and profit driver for the business,” she said, adding that the company is working with the US government on a “regulatory pathway” to supply its formula for the “long term”.
Executive chairman Dennis Lin said the business was enjoying a strong growth trajectory, record revenue, margin improvement across the whole business, and the company’s first profit.
“The equity raising will ensure that the company is well capitalised to pursue our growth opportunities going forward.”
A further $19 million will be used to build its inventory as it needs a longer lead time to buy the base powder and raw materials before exporting to China and the US.
