The initial public offering (IPO) of Dronamics Capital on the SME growth market BEAM of the Bulgarian Stock Exchange (BSE) attracted strong investor interest, with the offering oversubscribed almost 4.5 times. The company, established to invest in cargo drone manufacturer Dronamics Global Ltd., raised the maximum planned amount of nearly 6 million levs (3 million euro) by offering investors 5,334,081 shares with a par value of 1 lev at an issue price of 1.1 levs earlier this month.
That was the sixth successful listing on the BEAM market this year. To some extent, the strong interest could be explained with the offering method (an auction) in which the shares are distributed proportionately. That means some investors may have bid for more shares to make sure they get the desired number. BSE data show a total of 1,129 deals were closed, i.e. an average of 4,724 shares per deal.
Investing the capital
According to Dronamics Capital's statutes, the funds raised through the IPO will be invested in Dronamics Global, the company's UK-registered parent. The preference B-class shares will allow investors in Dronamics Capital to swap their holdings for a certain number of shares in Dronamics Global when the parent company makes an IPO. The company's founders say that may happen in three to five years.
As for now, 90% of the raised 5.87 million levs will be invested in Dronamics Global, which in turn will use the capital to prepare a Series A investment round to fund the certification and the launch of its first aircraft. That means that as much as 5.28 million levs will be injected in Dronamics Global's capital. Given the 125 million euro valuation of the UK-registered firm, that makes a share of 2.16%. Since Dronamics Capital will not participate in later capital increases, its share in the British company will be diluted; however, that is expected to be made up for by a higher valuation of Dronamics Global.
Dronamics Capital will use the remaining 10% of the raised funds for operating activities and covering the IPO costs.
The Bulgarian startup's mission is to revolutionize cargo transport by reducing the cost and time of delivery. For the purpose, the company has developed a new type of unmanned airplane, Black Swan, which was unveiled at Sofia Airport a few days after the IPO. The Black Swan can carry up to 350 kg of cargo at a distance of 2,500 km. It currently runs on E10 fuel but is planned to switch to bioethanol by 2023.
The company's founders say Dronamics is intended to operate the entire transport service infrastructure and not sell the planes. For the purpose however the company will have to have its own operators to navigate the planes. Also, it will have to be certified as an aviation company to be able to land at and take off from international airports. Dronamics plans to obtain certification by 2022 and begin commercial operations. By now the company has signed agreements with more than 40 airports in Europe and a further 20 elsewhere in the world.
Dronamics was founded in 2014 by the Rangelov brothers Svilen and Konstantin. Four years later the operations moved to the UK, where the brothers registeredDronamics Global Limited.