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IQGeo raises funds as it targets OSPInsight International Inc acquisition

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IQGeo Group PLC (LON:IQG) said it has raised gross proceeds of £5.3mln through an oversubscribed share placing and a direct subscription by directors of the company to help fund its acquisition of US-based geospatial software firm OSPInsight International Inc (OSPI) for up to US$8.75mln (£6.5mln).

The software firm said it has raised the funds through the placing of around 6.1mln shares and a director subscription of 698,719 shares at a price of 78p each, equal to its closing price on Monday, conducted through an accelerated bookbuild by broker finnCap.

WATCH: IQGeo acquires OSPInsight to complement and globalise its product

“We are pleased to have completed this fundraising and are grateful for the strong support shown by both our existing shareholders and our new institutional investors, whom we welcome on to the register. The participation and contribution from the board also demonstrates our strong belief in the strategy and prospects for the group”, IQGeo chief executive Richard Petti said in a statement.

“We embarked on this fundraise from a position of strength, thanks to the Group’s strong balance sheet and positive trading momentum during the second half of the year against a challenging trading environment. The proceeds of the Fundraising will enable us to build on that momentum by funding the acquisition of OSPI which represents a significant and compelling opportunity for the Group to expand its presence internationally in key global markets and to build on our platform for future growth”, he added.

In a separate announcement on Tuesday morning, the company said the purchase of OSPI will comprise an initial cash payment of US$5.6mln and the issue of shares in IQGeo with a value of US$1mln. The remainder of the sum will be deferred or earn-out consideration and will be settled in equal parts cash and new shares.

IQGeo said the acquisition will expand its intellectual property in the “technically complex area of network design, splice design and detailed record keeping” which will, in turn, accelerate its own development of a “market-leading system of record for large customers”. The merger will also add 200 customers to IQGeo’s books.

“The acquisition of OSPInsight significantly expands our user base providing us with a materially enlarged and loyal market for new product subscriptions.  Additionally, it provides us with a highly complementary product giving us access to the attractive alternative fibre ISP and private network operator markets which have been under-served by the geospatial incumbents”, Petti said.

“With the complementary technology and enlarged customer base, the OSPInsight acquisition strengthens our competitiveness, diversifies our revenue streams and strengthens our financial position. We look forward to welcoming OSPInsight to the IQGeo Group”, he added.

In a note on Tuesday, analysts at house broker finnCap initiated coverage on IQGeo with a 110p target price, saying the OSPI acquisition is a “complementary fit in both product suite and user base” and will “accelerate the scale-up, speed to profitability and cash generation” of the business.

IQGeo shares were up 5.1% at 82p in late-afternoon trading.

–Adds results of fundraising and updates share price–

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