Bigtincan to raise $35m in pursuit of takeover opportunities

Two weeks after withdrawing its takeover bid for LiveTiles (ASX: LVT), sales performance software company Bigtincan (ASX: BTH) has tapped investors to raise $35 million in order to chase further M&A opportunities. 

The equity raise, announced after the market closed yesterday, allows investors to buy in at 60cps, representing a 16.7 per cent discount compared to the trading price of 72cps on 6 December 2022.

While $30 million will be issued as part of an institutional placement of new shares, the group is also looking to raise an additional $5 million under a non-underwritten share purchase plan.

Bigtincan plans to use $18 million to identify strategic M&A opportunities, $10 million for future growth initiatives and $7 million as working capital.

The news comes at the same time the company is considering a $442 million takeover offer from California-based SQN Investors – a long/short equity investment adviser focused on technology companies.

SQN already has a 13.6 per cent stake in Bigtincan, and its partner Farouk Hussein has been a director since October 2021.

According to Reuters, SQN voiced its opposition to the placement in a letter, urging Bigtincan to not go through any capital raise or acquisitions. 

"We urge you to not pursue any capital raise or do any acquisitions at this time," SQN said in its letter to Bigtincan, referring to a media report that the latter's shares entered a trading halt on 7 December pending a placement.

"We would urge you to instead honour your fiduciary obligations and engage with the various parties that have approached you about a control transaction, including SQN Investors."

To evaluate SQN's bid, Bigtincan established an independent board committee (IBC) comprising current independent non-executive directors and CEO David Keane, who are still waiting on the suitor to prove funds for the proposal.

“The IBC, after evaluating the indicative proposal with its advisers is still waiting for SQN to prove funds prior to engaging further and completing its assessment of the merits of the indicative proposal,” Bigtincan said to shareholders yesterday.

“While SQN had indicated that it proposed to fund the indicative proposal with a combination of equity from SQN and its affiliates, and debt financing, it did not currently have binding commitments for that funding, which was one of many matters the IBC carefully considered in its evaluation of the indicative proposal.”

The Sydney-founded company, based in the outer suburbs of Boston, Massachusetts since 2014, offers a suite of sales solutions including content management, training, coaching, and buyer interaction.

Bigtincan has 2,000-plus customer deployments, more than 1 million licensed users and an established business in North America, in addition to an emerging business in the UK and European markets.

The group cited limited engagement and lack of access to due diligence as the reason its $65 million takeover bid for digital workplace software company LiveTiles fell through. A week after the deal collapsed, LiveTiles co-founder Karl Redenbach departed as CEO.

Previous Bigtincan takeovers include the $116 million acquisition of data-driven sales coaching platform Brainshark Inc, as well as Vidinoti, VoiceVibes, Clearside, Agnitio, Veelo, Asdeq, XINN, Zunos and Fatstax.

For FY23, Bigtincan is forecasting $137 million to $143 million in annualised recurring revenue (ARR) in, representing a 14 per cent to 19 per cent ARR growth from end June 2022.

The group also projects revenue in the range of $123 million to $128 million.