Carly Holdings attracts an excess of investor interest raising $4.85m
The last 12 months have been turbulent for many operating in the automotive sector, but Carly Holdings Limited (ASX:CL8) has demonstrated that there is no shortage of optimism or investor appetite for participation in the car subscription industry. Carly Holdings which operates the Australian car subscription service, ‘Carly’ has just closed an oversubscribed renounceable rights issue having raised $4.85 million before costs, $1.45 million more than the $3.39 million that was initially sought by the company.
Rights Issue filled ahead of schedule
Carly announced the Renounceable Rights Issue less than a month ago on 15 April 2021, and it was oversubscribed less than a month later; with major shareholders of the company participating, as well as SG Fleet (ASX:SGF) and Willoughby Capital taking up their entitlements of over $1.50 million.
CEO, Chris Noone, has been thrilled with the overall response, “we received strong support from our shareholders and we also welcomed new institutional and professional shareholders to our register. The popularity of car subscription is increasing and Carly is on a strong growth trajectory which will be supported by strategic utitlisation of these new funds.”
COVID-19 proved a double edged sword for Carly
Rather than seeing subscriptions drop, Carly saw increased adoption of car subscription during COVID-19, observing a 74% growth in subscribers from the start of the pandemic in March 2020 to March 2021. Chris said that many consumers are seeking flexibility; opting for an all inclusive monthly recurring vehicle subscription over outright purchase or long-term financial commitment to a vehicle. The all inclusive monthly car subscription model is easy to understand and has continued to grow in popularity since Carly’s launch in March 2019.
However, the strong demand for vehicles began to exceed supply once COVID-19 began impacting the automotive industry, causing closures of manufacturing plants, shipping delays and shortages of microchips and critical automotive components. The disruption along the automotive supply chain is reverberating globally, resulting in a deficit of new cars in Australia and a 30% increase in the price of used cars.
Funds to be deployed to accelerate growth of car subscription
Carly intends to leverage a portion of the capital to increase the size of the vehicle fleet. The funds raised will support this initiative in the short-medium term, at least until vehicle supply returns to pre-COVID levels.
Chris Noone noted that while strong growth was achieved in H1 FY21 Carly Car Subscription, full growth potential was not achieved due to vehicle supply restrictions.
“During this period it has proven difficult to secure significant additional vehicles to keep pace with the level of demand for subscriptions. Leveraging our funding to increase the supply of vehicles available for subscription will increase our level of control over vehicle availability and deployment, and will ultimately deliver stronger revenue growth” he concluded.