Airtasker's Tim Fung defends unusual equity for ads contra deals
The online marketplace's CEO is betting future growth on a series of strategic marketing deals with US and local media companies that have put shareholders at risk of dilution.
Airtasker CEO Tim Fung has defended the online task marketplace's unorthodox move of issuing shares and convertible bonds to pay for marketing exposure, declaring the approach will supercharge its growth in new markets.
The ASX-listed company has over the past two months unveiled a slew of new multi-year marketing deals with radio network ARN, out of home advertiser oOh!Media, and two American media companies offering shares and convertible notes for advertising.
If all were to be eventually converted, they would dilute shareholders by $35 million, a significant sum for a company valued at $122 million on Tuesday. But Fung insists they are the best investment the company could be making and any cost to shareholders will be outweighed by the growth the deals unlock.
“In Australia it's a convertible note, it's got a 5.8% coupon, and it's our option as to whether we want to pay that back in cash or convert it into equity when it matures in two years,” Fung told Capital Brief, suggesting the opportunity cost of paying cash upfront for the deals would be more like 20-30%.
