Billionaire Dermot Desmond’s stake in Datalex is set to rise to 49.3 per cent as the Irish ecommerce software provider to airlines completes a share sale largely designed to repay expensive loans from the businessman.
Datalex announced the final results of a multipronged €25 million share sale in a statement on Thursday morning, ahead of an extraordinary general meeting (egm) where almost 100 per cent of voting shareholders approved elements of the cash call.
Mr Desmond, a long-time investor, has been a consistent provider of finance to Datalex since it was rocked five years ago by an accounting scandal and, subsequently, the Covid-19 pandemic.
Mr Desmond’s IIU Nominees investment unit owned 40.3 per cent of the company before the share sale was announced in late August. He ended up having to take up 85 per cent of a portion of the new shares offered to small investors as part of the fundraise, according to the results of the exercise.
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Datalex owes another Desmond vehicle, Tireragh, more than €19 million, including built-up and unpaid interest and fees. The loans currently carry an 18 per cent interest rate and are due to be repaid by the end of the year.
Company chairman David Hargarden singled out Mr Desmond at the egm “for his unwavering support, without which we would not have got through the challenges that this company has been through over the last five years”.
“This is a milestone event for the business,” he said of the share sale, pitched as global airline traffic is set this year to top pre-pandemic levels and as airlines continue to invest in their ecommerce technology. “We look forward to the future with great optimism.”
Still, shares in Datalex remain down 30 per cent over the past 12 months, as investors stuck to the sidelines pending the outcome of the capital raise and as they await evidence of an expected bump in transaction-based revenues from a number of recent deals with airlines.
The Irish Takeover Panel agreed three years ago to waive a normal requirement that Mr Desmond make a mandatory takeover offer for the remainder of Datalex, after he pushed through the key 30 per cent stake threshold as a result of another €25 million equity raise. It agreed late last month that he could increase his stake to as much as 52 per cent without triggering an offer, subject to approval from shareholders other than Mr Desmond. Some 99.7 per cent of voting investors approved this at the egm.
After Tireragh is paid back, the remaining €5.2 million net proceeds from the share sale will be used for working capital and to invest in the company’s products.
Datalex also plans to raise a minimum of €5 million early next year in a follow-on share sale, with the size and timing of that cash call to be “determined by the pace at which the board wishes to invest in its anchor solution and in new product offerings”.
The cash call consisted of three parts, a so-called firm placing with large shareholders. Nick Furlong’s Pageant Investments owned 8.3 per cent of the company before the transaction, while the businessman held a further 3 per cent personally. Sean O’Driscoll, the former chief executive of consumer electrical goods group Glen Dimplex, owned a further 5.3 per cent.
Datalex also raised a further €8 million from an open share offer to existing shareholders that closed on Monday. The third part was an agreement by Mr Desmond to buy whatever shares were not taken up by small investors under the open offer. He was left with 85 per cent of the shares on offer in this portion of the equity raise.
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