Hotel Brands

Safestay announces £11m fund raise

Safestay, the owner and operator of contemporary hostels, has announced the company is carrying out a placing and subscription to raise approximately £11m, via a placing of approximately 29.2 million shares.

To raise the money Safestay is placing 27.6 million new ordinary shares at a price of 34 pence per share and a subscription of approximately 1.8 million new ordinary shares at a price of 34 pence per share. In addition to the proposed placing and subscription, the company intends to provide all qualifying shareholders with the opportunity to subscribe for an aggregate of approximately 2.85 million new ordinary shares at the same price.

The proposed fundraising is subject to shareholder approval. Safestay said a general meeting is expected to be convened around 17 December 2018.

The hostel operator said fundraising is “primarily” to continue the implementation of the company’s roll-out strategy. In particular the board believes “based on the management team’s extensive experience of developing a brand led portfolio of sites, this is an opportune time to expand and to continue to benefit from early mover advantage in this fragmented but growing market”.

The company intends to use the net proceeds of the fundraising for three primary purposes, being:

  • growth capital for existing investments;
  •  the conversion and refinancing of two current sites; and to fund potential opportunities in new locations to accelerate growth

Safestay also believes the fundraising will enable it to leverage its platform and established brand with a view to building a self-sustaining growth position through significant organic and acquisition opportunities.

Larry Lipman, executive chairman, said: “We continue to believe that Safestay is a proven and scalable brand. This, together with the current market environment favouring the buyer, means the proposed fundraising is timely and once invested will enable us to leverage the company’s existing platform and established brand with a view to building a self-sustaining growth position, through significant organic and acquisition opportunities.

“As a management team we are excited by the opportunities in front of us. The proposed new capital reflects our ambition to evolve Safestay into a leading contemporary hostel brand offering guests a safe and stylish experience staying in centrally located buildings at competitive rates per night. I am also pleased that we are offering shareholders the opportunity to participate in the next growth stage of the business.”

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