Safestay (SSTY) has raised £10 million via a placing of 27.6 million and a subscription of 1.8 million new ordinary shares at 34p each.
The company is on track to deliver double-digit revenue growth in 2018, with strong interest among investors, with all of directors at the company committed to participating in the fundraising.
The funds will be used to continue the hostel operator’s successful roll-out strategy. It benefits from an early mover advantage in a fragmented but growing market.
Specifically, it said funds are to be used as growth capital for existing investments and to fund acquisition opportunities in new locations.
The company intends to provide all shareholders the opportunity to subscribe for up to 2.9 million shares at the same price to raise another £1 million, on the basis of 1 new share for every 12 held.
It has called for a general meeting to vote on the capital raise on December 17, after which, if approved, shares will be admitted to trading the next day.
Larry Lipman, Executive Chairman, commented: "We continue to believe that Safestay is a proven and scaleable brand.”
“This, together with the current market environment favouring the buyer, means the proposed Fundraising is timely and once invested will enable us to leverage the Company's existing platform and established brand with a view to building a self-sustaining growth position, through significant organic and acquisition opportunities.”
Canaccord Genuity is acting as nominated advisor and broker.
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