Verve raises 360 MSEK to broaden investor base and facilitate further growth

Yesterday, after the market close, Verve announced that the company has successfully completed a 360 MSEK directed share issue (~ 33 MEUR) through the placement of 12.9 million new shares, corresponding to a dilution of 6.4% to existing shareholders. The subscription price was settled at SEK 28.00 per share, representing a 6.9% discount to yesterday’s closing price of 30.08. 

The transaction, which was oversubscribed, attracted, according to the company, strong interest from institutional investors across Sweden, Norway, the UK, and the US, and resulted in a broadening of Verve’s shareholder base with institutional investors in the likes of DNB Asset Management, Cicero Fonder, and, according to the company, a reputable Swedish multi-family office. CEO Remco Westermann also participated in the share issue. In addition to strengthening the balance sheet, Verve intends to use the net proceeds from the issue to further facilitate both inorganic and organic growth by scaling sales capacity, broadening its product solution portfolio, as well as expanding its capabilities within AI and emerging advertising channels.

From our perspective, the decision to carry out a directed share issue came somewhat unexpectedly, particularly considering Verve’s recent refinancing activity and improved cash conversion trajectory. However, considering the relatively limited size of the transaction, we do not see any immediate impact on our estimates, view of the company, or recommendation at this stage. While we believe the timing of the issue may have surprised the market, we acknowledge the company recently has expressed an ambition to raise its visibility and intensify its international capital market presence. Given the relatively concentrated shareholder base structure to date (The CEO and Oaktree Capital Management together holds around 45% of outstanding shares), the rationale to diversify and institutionalize the ownership base is understandable from our point of view. As for the use of proceeds, the areas identified such as scaling sales capacity, AI development, and expansion within emerging advertising channels, are well aligned with Verve’s previously communicated strategic priorities and do not represent a shift in direction. We will update our forecasts no later than in conjunction with the Q2 report.