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WANdisco – prudent to lock-in some gains I suggested, now directors do… and a placing

By Steve Moore | Monday 4 December 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I previously wrote on WANdisco (WAND) last month as the shares rose further above 800p – suggesting, with forecast losses and year-end net cash of $7.1 million, that despite the growth potential it significantly market sentiment bullishness which saw the shares at those levels and, with this famously volatile, that after the ride so far this year here it prudent to lock-in gains. Today a placing and director share sales…

The placing was announced as “to raise gross proceeds of a minimum of $10.0 million”. However, “investor demand for the placing significantly exceeded the announced minimum targeted size… The board, after careful consideration with the bookrunners, has exercised its right to increase the size of the placing… raising gross proceeds of approximately $22 million… The placing price represents a discount of approximately 2.7 per cent. to the company's closing middle market share price on 1 December 2017”.

The share price has though markedly declined since early November – seeing the above noted mean a placing price of 550p per share. It was added that “WANdisco continues to experience strong organic revenue growth underpinned by its patented WANdisco Fusion data replication technology. The company plans to use proceeds from the placing to capitalise on this momentum and to accelerate its growth ambitions”.

I also though note the price still compares to a sub 200p share price at the commencement of 2017, will mean a £225 million market cap and that in addition to the placing “certain existing shareholders, including the directors, David Richards and Yeturu Aahlad, have sold in aggregate 1,045,000 existing ordinary shares”.

CEO Richards and co-founding Chief Scientist Aahlad respectively retain 2,089,233 shares (after 500,000 sold) and 2,430,091 shares (after 345,000 sold), are not to dispose of any further interests in the shares for at least 12 months and Richards emphasises “the fundraising will enable us to enhance our ability to capitalise on the sizeable market opportunity, as we deepen and broaden our strategic partnerships in order to maximise our sales pipeline. In addition, the proceeds will strengthen the company's balance sheet, giving confidence to new strategic partners and customers”. However, I’ll wait to see how this ‘enhanced ability’ begins to financially play out before considering a more positive stance.

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