To pay the upfront consideration of US$28.95mln, Gresham will use some of its cash resources and has proposed a £20mln placing at 160p per share and a retail offer on PrimaryBid to raise up to another £1mln at the same price.
The UK company, which specialises in software to help financial institutions with reconciliation, regulatory reporting and cash management, said the acquisition “represents a transformative opportunity to combine two complementary and high-quality businesses to drive meaningful earnings accretion”.
It also expects the combination to immediately accelerate its earnings growth and quality of revenues, with Electra’s recurring revenue representing roughly 97% of its total turnover last year.
Going for over two decades, Electra provides software and services developed to improve efficiency and mitigate risk in post-trade processing, predominantly within the US financial services industry.
Electra generated revenues of £10.1mln, underlying earnings (EBITDA) of £2.4mln and adjusted cash EBITDA of £0.9m last year.
The acquisition will help Gresham “secure a leading position in the buy-side market segment and strengthen its US market presence”, it said in the announcement, with all directors intending on subscribing to the fundraising.
A US$15mln multicurrency bank facility and US$10mln accordion loan facility have been secured from the Bank of Ireland, which can be used to satisfy any payments of the deferred consideration.