Nanoco Group's (LON:NANON) planned raise of £8.6m (subject to approval) should remove a major constraint on the company’s ability to execute its strategy. The balance-sheet strength should support customer negotiations at both the developmental level and as it moves towards volume shipments. The ability to attract and retain good staff and the ability to monetise and protect its IP both in display and beyond should also benefit, albeit at the expense of 20% dilution.
Subject to shareholder approval, Nanoco has successfully raised £8.6m. The company will issue 47.7m new shares at 18p each, a discount of c 35.7%, which will represent 16.7% of the enlarged share capital.
The strengthening of the balance sheet should help the company in a number of ways. Firstly, it should significantly strengthen customer confidence, supporting engagement from the R&D level through to volume orders. Nanoco’s ability to attract and retain skilled employees will also benefit, key to enabling the company to exploit its lead in cadmium-free quantum dots in display and to develop earlier-stage projects in areas such as medical imaging. With its monthly cost base running at £670k – somewhat below our current estimate of £790k – Nanoco should have enough cash to last beyond July 2019, even in the absence of substantial volume orders. We leave our forecasts unchanged pending shareholder approval.
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