Published on the 04/06/2014 | Written by Beverley Head
The range of options available to technology companies wanting access to capital just got a little broader with the introduction of a bank-backed corporate bond for NEXTDC…
One of Australia’s four major banks, the NAB, has this week introduced its first ever senior unsecured bond – for data centre and cloud computing specialist NEXTDC which is intended to raise at least $30 million.
Targeted purely at professional and sophisticated investors, the corporate bond delivers a fresh option for technology companies looking to raise capital. In the past IPOs, additional stock offerings, corporate loans and private placements have tended to be the preferred range of fund raising options for technology companies.
In this deal NAB is the sole arranger and bookrunner for the bond issue. According to NAB executive general manager debt markets, Steve Lambert, the bond issue provides core growth funding. “It clearly shows how the bond market can be supportive of our growing companies and complementary to a healthy bank market. The corporate bond market provides NEXTDC with a new and differentiated investor base focused on the cash flow generation capabilities of the company now and into the future.”
For NEXTDC the corporate bond diversifies its debt funding sources and helps the company establish relationships with investors in the debt capital markets.
NEXTDC CEO Craig Scroggie said NAB was able to provide the company with a “one-stop shop for our debt capital requirements”.
A listed company, NEXTDC reported revenues of $7.6 million for the six months to the end of December. It however reported a $7.3 million loss while capital expenditure grew 68 percent compared to the similar period a year earlier to $82.6 million.
The $30 million corporate bond adds to the $130 million in cash and funding raised during the first half of the financial year, which also includes a $30 million debt facility.
Although corporate bonds are not uncommon internationally, they have not been an overly popular way of raising funds in Australia to date.
For investors considering buying into the corporate bond market the Australian Securities and Investment Corporate has issued a useful guide explaining how corporate bonds work, and the risks associated, reminding investors that they are in essence lending money to a company through the bond structure.
