Megaport to raise $60m for network expansion

Listed Australian software-defined network provider Megaport will raise $60 million through a capital raising to upgrade and expand its network.

The company today said it would issue 13.3 million fully paid ordinary shares at a price of $3.75 per share - 7.4 percent less than the company's March 19 closing price of $4.05 - to investors to raise around $50 million.

Megaport said it had commitments from three "cornerstone" US investors who had signed up for more than $50 million in shares at the $3.75 price.

The company's founder and chairman Bevan Slattery will also offer 6.6 million of his own shares through a secondary offering at the same price per share.

Slattery - the company's major shareholder - will retain a 23 percent interest in Megaport after the secondary offering.

The remaining $10 million would be raised via a share purchase plan at the same $3.75 price per share, Megaport said.

The company said it was undertaking the capital raising to allow it to upgrade its network capacity and accelerate expansion to new locations and markets. 

It wants to grow to reach 300 data centres by mid-2019.

The company currently services 195 data centres and 2401 ports across 57 global cloud regions operated by seven cloud providers such as Google, Microsoft, AWS and Alibaba.

"Enabling our software defined network in more markets that are currently underserved by cloud connectivity is critical to maximising our first-mover advantage," CEO Vincent English said in a statement.

"This capital raising will enable Megaport to support these strategic initiatives and fuel the connectivity services driving tomorrow's architecture."

Megaport expects to settle the placement and secondary offering this Friday, and to allocate the share purchase plan shares on April 20.

The company claims to be the first global software defined network that 'aligns network to cloud and virtualises network services'.

Its 907 active customers include the likes of News Corp, Vodafone, IOOF, and Getty Images, among others.

The company is currently bringing in $1.7 million of monthly recurring revenue, and annualised revenue of $20.4 million.

The majority of its business at the moment is in direct public cloud, accounting for about 53 percent of its service connections. Twenty-four percent of customers are using its internet exchange services, while 23 percent are on private connections.

The capital raising follows a similar effort last year to raise $27.8 million for a further expansion into North America and Europe. Megaport moved into China earlier in the year.