Hardide raises £2.5 million following investor demand
, the surface coatings technology supplier, raised £2.5 million before expenses in a placing on Tuesday, at 63p per share, after ‘significant demand’ from investors.
Hardide said they intend to spend about £1.5 million of the funds to buy equipment as part of its move to new premises in Bicester during 2020.
Plans include upgrading three coating reactors to the latest technical specifications, new pre-treatment and component cleaning equipment, and a new development reactor, the company said.
Hardide also told investors that the funds would strengthen its balance sheet, and provide additional reassurance to large customers intending to enter into long-term supply agreements.
The placing was significantly oversubscribed, with new and existing investors participating, some of which included the Marlborough Nano-Cap Growth Fund, and Canaccord Genuity, who hold more than 10% of the company.
Shares in Hardide were trading 6.45% higher at 66p on Tuesday
Robert Goddard, Chairman of Hardide, commented: "I am delighted that we have been supported by new and existing shareholders to provide the Company with additional capital to support our growth strategy.”
“The funds will mainly be employed at the new UK site which will see improvements to production capacity, capability and environmental performance to deal with the increased demand for our products.”
Hardide said that a major factor in the decision to buy new equipment was the need to keep the processing capability for Airbus components at the present UK site, because Airbus approval is specific to equipment and its location.
In March 2017, Hardide attained Approved Supplier status from Airbus, and was selected for Airbus A330 wing components in August 2019.
Broker Allenby Capital believes Hardide could be an acquisition target, and said in a note: “The technology and industry leading gross margins of Hardide haven’t gone unnoticed by larger industrial coatings players”
Hardide reported gross margins of 52.29% in 2018, and 47.84% in 2019, but expects margins to recover to above 50% going forward.
Allenby Capital said: “We believe Hardide would make an attractive target for one of these players as they look to grow revenues, increase margins and expand their product offering.”
Hardide Chairman Robert Goddard also reiterated his 2020 outlook: "The year has started well and we look forward to the year ahead with confidence.”
In the same announcement, Finance Director, Peter Davenport, also revealed he is stepping down to pursue a career in education. Hardide told investors it has identified a talented successor and is in the process of finalising contract terms.
Technical Director Dr. Yuri Zhuk also announced his intention to sell 208,775 shares to fund a property purchase.
The placing shares will represent 7.47% of firm’s total capital, and was carried out by finnCap and Allenby Capital.
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