Bubs announces $40m share placement to support expansion into China
Written on the 18 June 2018 by David Simmons
Shares in Bubs Australia Limited (ASX: BUB) have resumed trading after the infant formula producer announced a $40 million injection of fresh capital through an oversubscribed share placement.
The fresh placement follows the recent announcement of a number of agreements with Australian and Chinese partners as part of the group's Chinese expansion strategy.
Bubs says the placement will be used to provide working capital to support new opportunities and give its push into China a solid boost.
Funds will also be used for brand marketing, new product development, product processing, and payments to vendors of NuLac Foods.
The placement will result in the issue of 53.5 million new shares in Bubs Australia which will rank equally with existing Bubs Australia shares.
Chairman of Bubs Australia, Dennis Lin, says the placement was a great success for the infant milk formula company.
"We are very pleased with the capital raising, which was considerably oversubscribed," says Lin.
"We thank all who have made it such a success, both cornerstone and new professional investors."
"The oversubscription is a terrific vote of continuing confidence in the Bubs vision and the progress we are making to realise our focus on the immense Asia market for premium goat milk infant formula."
The placement follows the recent announcements of major agreements with key partners in the group's expansion into Asian markets.
Bubs signed an agreement with New Times Asia to supply Bubs and CapriLac products to up to 20 e-commerce platforms in China with a sales commitment for $27m in FY19, increasing to $24m in FY20 and $27m in FY21.
The company also signed an agreement with Alibaba to launch Bubs on the Chinese e-commerce platform Tmall Global.
As part of its expansion plans, Bubs teamed up with Deloraine Dairy, a CNCA licensed facility, in order to have Bubs certified and up to the strict standards China requires for imported food products.
Shares in Bubs are down 7.82 per cent to 82c per share at 10.30am AEST.
Business News Australia
Author: David Simmons