FINEOS Corporation Holdings PLC (ASX: FCL) has announced a US acquisition and it will do a capital raising to fund it.
FINEOS is a provider of systems for life, accident and health insurance carriers globally with 7 of the top 10 in the US and 6 of the biggest 10 in Australia.
US acquisition
FINEOS is going to acquire Limelight Health, which is a US-based provider of end to end quoting, rating and underwriting software as a service (SaaS) which streamlines workflow for life, accident and health insurance carriers.
FINEOS said it will expand the company’s addressable market with complementary technology offering that strengthens its existing capabilities.
In the 12 months to 30 June 2020 Limelight generated revenue of US$14.4 million, which was up 38%.
The acquisition cost is US$75 million, or $104 million in Australian dollars. It will be funded by a mix of cash and a capital raising, with some shares (CDIs) issued to Limelight’s management, employees and other shareholders.
The capital raising will comprise $85 million from institution and a non-underwritten share purchase plan (SSP) to raise up to $5 million. It will be priced at $4.26, a 7.2% discount to the last closing price.
Summary
The acquisition seems like a good one by FINEOS, a very useful bolt-on acquisition which will expand its capability to clients. The share price has performed strongly over the past few months, so I’m not sure if it’s a fantastic buy today – but after the acquisition it could be a more compelling buy, so I’d probably take part in the capital raising. But there are also some great ASX growth shares I’d buy first.
[ls_content_block id=”14948″ para=”paragraphs”]
