Xero completes capital raising
Xero shares have jumped more than 10 per cent to a new high after the company announced it had raised $180 million, mostly from United States investors, in its largest capital-raising to date.
Chief executive Rod Drury said the "massive war chest" would enable the Wellington-based company to roughly double its 584-strong workforce over the next 18 months.
The capital-raising was achieved on a market capitalisation of more than $2 billion, for just an 8 per cent stake in the firm. Xero issued 9.92 million new shares at $18.15 a share.
Xero shares were trading up 10.8 per cent at $19.89 shortly after the NZX opened this morning.
Drury said the new funding would be applied across the business but would give it a "huge strategic lift to take on the US market".
"Primarily this was about sending a very clear message about our intentions in the United States and to enable us to continue to attract the best staff," he said.
"If you are the best capitalised, you can get the best talent."
Xero has just moved into new premises in San Francisco, established a team in New York, and opened a call centre in Denver employing a few dozen staff.
"We are really going for it," Drury said.
Drury would not rule out Xero going back to the market for more cash in future, but thought Xero's last capital-raising was probably its last.
He said Xero was not going to hire another 1000 people and its numbers in Australia were probably about right.
"There is no point saying 'no', but it is hard to think why we would need any more money at this point," he said.
Xero said Matrix Capital Management and Valar Ventures, a company controlled by high profile US investor Peter Thiel, were among existing shareholders that participated in the funding exercise. Of the total raised, $147m came from US investors.
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