Capital raise to accelerate growth opportunities

Serko Limited (NZX/ASX:SKO) (“Serko”), a leader in online travel booking and expense management for the business travel market, today announced it is conducting an equity raising of up to NZ$55 million to accelerate and execute on the opportunities arising from a changing business travel market.

Serko plans to raise the capital via the issuance of ordinary shares in Serko by way of a NZ$45 million fully underwritten placement ("Placement") and a NZ$10 million non-underwritten share purchase plan ("SPP") (together, the "Offer").

Darrin Grafton, CEO of Serko, said: “The COVID-19 pandemic is creating opportunities for us to accelerate the development and rollout of our technology to support our Travel Management Company (TMC) and reseller partners.
“In recent months, we have received inbound demand from these organisations as they consider, plan and request accelerated timetables to onboard new customers, deliver new features and expand existing partnerships. This demand has exceeded our expectations and is highlighting increased opportunities from a changing travel industry.”
While Serko has $33.6 million of cash on its balance sheet, the timing of meaningful revenue generation is uncertain. Therefore Serko is raising capital to further prepare for growth opportunities and to ensure a prudent approach with regards to capital management in this COVID-19 affected environment.
Mr Grafton said: “Serko’s priority is to ensure it has the resource and capacity to execute on its strategic priorities, positioning the company for growth when business travel normalises and to capitalise on opportunities arising from changes to the travel industry.
“Serko’s Board and management consider the company’s market positioning and growth prospects within the travel industry remain significant over the medium to long-term, notwithstanding the impact of the COVID-19 pandemic on the business travel industry. It also remains confident in the recovery of business travel over time.
“Nevertheless, as we indicated at our annual shareholders meeting in August, we are unable to forecast our likely operating revenue for the 2021 financial year with any certainty,” Mr Grafton said.

The proceeds from the equity raise will be used to:
• Accelerate the development of our globally scalable, localised travel platform, allowing us to be well positioned for recovery as business travel increases. Serko is progressively scaling-up to bring the power of Zeno to the global market.
• Support increased demand for customer and reseller onboarding to drive volume across all markets, particularly in Europe and North America.
• Expand the breadth and depth of content channels across all markets, responding to new and changing business traveler needs.
• Enhance customer experience functionality for changing market requirements.
• Continue to scale the technology platform for international expansion.
• Fund small M&A growth opportunities, aligned to strategy, if and when they arise.
• Provide Serko with additional balance sheet flexibility to respond to changes in the business environment.
Details of the Equity Raise

Placement
The Placement will be conducted today through a bookbuild in which institutional and other select investors in New Zealand, Australia, Hong Kong, United Kingdom and Singapore will be invited to participate by Craigs Investment Partners Limited and Ord Minnett Limited. A trading halt has been granted by NZX and ASX prior to the market opening today.
The Placement will be fully underwritten by Craigs Investment Partners Limited and Ord Minnett Limited. The Placement will raise gross proceeds of approximately NZ$45 million and is underwritten at a floor price of NZ$4.35 per share, which represents a 3.5% discount to the last closing price of NZ$4.51 per share on 30 September 2020 and a discount of 4.6% to the 5-day VWAP of NZ$4.56 ending on 30 September 2020.

Share Purchase Plan
Serko intends to offer the SPP to eligible existing Serko shareholders with a registered address in New Zealand or Australia, enabling them to subscribe for up to NZ$50,000 / A$46,500 of new Serko shares. The SPP offer size is up to NZ$10 million, and if scaling of the SPP is required, it will be done with reference to the shareholders' existing holdings of Serko shares at the record date of 30 September 2020. Serko can accept oversubscriptions at its absolute discretion. The price of the Serko shares offered under the SPP will be the lower of the Placement price or the five-day VWAP during the last five trading days prior to, and including, the SPP closing date (being 22 October 2020).
Serko assesses that the SPP will cater for a high majority of Serko’s non institutional shareholders, enabling them to participate and potentially increase their relative percentage holdings in Serko.
The final terms of the SPP are expected to be announced in more detail on 7 October 2020. An SPP Booklet, together with an application form, will be sent to eligible shareholders on 7 October 2020 and will be available on the website established for the SPP on the same day. The closing date for applications by eligible shareholders is 22 October 2020.
Eligible shareholders wishing to acquire Serko shares under the SPP will need to complete the application form, or apply online via the website at www.serkoshareoffer.com. Eligible shareholders may choose to take up their entitlements in whole, in part or not at all.
The Serko shares to be issued under both the Placement and SPP will rank equally in all respects with Serko's existing ordinary shares.
Key dates relating to the Placement and SPP are set out in the Appendix to this announcement.
A copy of the investor presentation, cleansing notice and corporate action notice accompany this announcement. Serko is making the Offer in reliance on a class waiver and ruling issued by NZX Regulation dated 30 September 2020.
Craigs Investment Partners Limited and Ord Minnett Limited are acting as Joint Bookrunners and Underwriters for the Placement and Craigs Investment Partners Limited and Cameron Partners Limited (New Zealand global alliance partner of Rothschild & Co.) are Joint Arrangers for the Offer. Serko's legal advisers are Russell McVeagh and Herbert Smith Freehills.
Ends

This announcement has been authorized for release to NZX and ASX by:
Susan Putt, Chief Financial Officer
Phone: +64 9 309 4754 or +64 21 388 009
Email: [email protected]
Investor Relations Enquiries:
Susan Putt, Chief Financial Officer
Phone: +64 9 309 4754 or +64 21 388 009
Email: [email protected]

For media relations queries please contact:
Richard Inder, Media Consultant to Serko
Phone: +64 21 645 643
Email: [email protected]

Appendix – Key Dates for Capital Raising

Placement
Conduct underwritten placement Thursday, 1 October 2020
Trading halt on NZX and ASX Thursday, 1 October 2020
Announce results of Placement and resume trading Friday, 2 October 2020
Settlement on the ASX Tuesday, 6 October 2020
Settlement on the NZX Wednesday, 7 October 2020
Allotment and trading of shares on NZX and ASX Wednesday, 7 October 2020
Share Purchase Plan
Share Purchase Plan Record Date Wednesday, 30 September 2020
Share Purchase Plan Offer Opens Wednesday, 7 October 2020
Share Purchase Plan Offer Closes Thursday, 22 October 2020
Announce results of SPP Monday, 26 October 2020
Settlement on the ASX Wednesday, 28 October 2020
Settlement on the NZX Thursday, 29 October 2020
Allotment of shares on NZX and ASX Thursday, 29 October 2020
Commencement of trading of shares on NZX Thursday, 29 October 2020
Commencement of trading of shares on ASX Friday, 30 October 2020