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The Agency has raised $5.6 million in funding to combat its capital deficit as revealed in its half-year results.
The capital raise comes at a much-needed time for The Agency as its half-year results to December 2018, published in March, revealed a capital deficit of $6.6 million.
At the time, the group said the deficit was a result of one-off costs associated with buying Top Level Real Estate and that it still had cash in the bank.
The Agency has secured $5.6 million from investors including from two new shareholders, Magnolia Capital and Honan Insurance Group, who have both injected a combined $4 million into The Agency.
The company has also entered into a debt reduction agreement to convert $5.8 million of existing debt into equity, reducing its total debt position by 27 per cent.
“Through this transaction, we will strengthen our balance sheet, by converting a significant level of debt and attracting new funds into the business,” said The Agency’s managing director, Paul Niardone.
Mr Niardone welcomed the two new shareholders to the group and said they would help The Agency continue its disruption of the market.
“We have attracted two new strategic shareholders who understand our business model and can see how it has disrupted, and will continue to disrupt, the Australian real estate market,” he said.
The investment by Honan Group includes not only a $500,000 investment but also access to Honan’s services, including tech solutions, industry data and support from Honan’s real estate solutions team.
Honan, in return, will receive exclusive access and promotion of its services across The Agency’s network of agents and landlords.
“It is also envisioned that Honan Group may receive exclusive access and promotion of services to the company’s agents and landlords,” The Agency told the ASX.
Magnolia Capital, meanwhile, has invested roughly $3.5 million to hold 17.9 per cent of the company, with director Mitchell Atkins joining the board as a non-executive director.
The money is made up of $600,000 through new placement of shares and up to $2.9 million to make up any shortfall in the planned raising.
Director of Magnolia Capital Mitchell Atkins said he was excited to join the team and help it grow.
“We are excited to be joining The Agency team from a board perspective, capital and an operational perspective on their growth journey, and see a deep range of synergies between our existing operating business units and their core business as a whole,” he said.
Honan’s chief executive, Andrew Fluitsma, said that this partnership brought together the best of both businesses in a way that would benefit clients.
“Our partnership approach builds on the synergies established with clients that brings together Honan’s extensive industry insight, expertise and international network to create relevant and market-leading solutions.
“The strategic partnership is a powerful combination that solidifies long-standing experience and knowledge to provide a platform to drive far more business impact for our clients.”
