Discounted Placement Risks Dilution but Funds Sparc’s Clean Tech Ambitions

Capital Raise Overview

Sparc Technologies Limited (ASX: SPN) has announced a successful capital raise comprising a A$2.2 million share placement and a subsequent Share Purchase Plan (SPP) aiming to raise up to an additional A$500,000. The placement, priced at 15 cents per share, attracted strong support from both existing and new sophisticated investors, reflecting confidence in Sparc’s strategic direction.

The placement will be executed in two tranches, with the first tranche issuing approximately 14.27 million shares under the company’s existing placement capacity, and the second tranche involving 400,002 shares subscribed by directors, subject to shareholder approval at the upcoming annual general meeting.

Strategic Use of Funds

Proceeds from the capital raise will be directed towards advancing the commercialisation of Sparc’s graphene-based additive product, ecosparc®, which has demonstrated promising results in recent field trials. This product aims to enhance the performance of epoxy-based protective coatings, a market with significant industrial applications.

Additionally, funds will support Sparc Hydrogen, a joint venture with Fortescue Limited and the University of Adelaide, which is pioneering photocatalytic water splitting technology for green hydrogen production. This innovative approach could offer cost and energy efficiency advantages over traditional electrolysis methods.

Ongoing research and development, patenting activities, and general working capital needs will also be covered by the capital raise, ensuring the company maintains momentum across its technology portfolio.

Share Purchase Plan Details

The non-underwritten SPP offers eligible shareholders in Australia and New Zealand the opportunity to acquire up to A$30,000 worth of new shares at the same discounted price as the placement. The SPP opens on 8 May and closes on 29 May 2025, with the company reserving the right to accept applications beyond the A$500,000 target or to place any shortfall shares.

This approach allows existing investors to increase their holdings without brokerage fees, potentially broadening the shareholder base and reinforcing support for Sparc’s growth initiatives.

Market Context and Outlook

The placement price represents a discount ranging from 14.5% to 28.6% relative to recent trading prices, a common feature in capital raises designed to incentivize participation. While dilutive in the short term, the fresh capital is critical for Sparc to progress its commercial and pilot projects, which could unlock significant value if successful.

Managing Director Nick O’Loughlin emphasized the company’s strong backing from investors and highlighted the funding as a key enabler for advancing ecosparc® towards commercialisation and supporting the green hydrogen pilot at Roseworthy, South Australia.

With Sparc Hydrogen fully funded through mid-2026 following prior investments, this capital raise complements existing resources to sustain innovation and market engagement.