Pet sitting and online pet services company Mad Paws (ASX: MPA) has received a strategic investment of up to $9.25 million from the media house Seven West Media (ASX: SWM). This investment comprises $5.25 million in the initial tranche, including $1.25 million in cash and advertising equivalent to $4 million. This investment will help boost Mad Paws’ brand reach through advertising.
Plus, there’s an option for a further $4 million investment in media in tranche 2. This collaboration presents a transformative opportunity for Mad Paws to enhance its brand visibility through SWM’s extensive network, reaching over 19 million Australians.
Seven West Media will acquire a 10.8% ownership stake in Mad Paws through a share placement, investing at $0.12 per share, a premium on the last trading price.
Co-Founder & CEO, Justus Hammer, said, “We are excited about the strategic investment from Seven which reflects the strong market position Mad Paws has and quality of business the team has built. With over 6m households now having at least one pet, Seven’s reach presents the perfect platform for taking Mad Paws’ growth to the next level. With Seven we will be able to reach a large national audience and position Mad Paws as the leading pet ecosystem in Australia.”
Mad Paws, an online pet ecosystem, connects pet owners with high-quality services and products. This investment aligns both companies’ interests for future growth. The funds will be used to boost advertising, create content, and streamline Mad Paws’ transition to a unified platform. Moreover, Mad Paws will work with Seven to leverage its broad media reach for an aggressive brand advertising campaign, aimed at propelling Mad Paws’ expansion in Australia.
The investment also follows a weak H1 FY24 for Seven West Media which reported a revenue and profit decline amid streaming boost.
SWM Chief Financial Officer, Managing Director and CEO elect, Jeff Howard, said, “Mad Paws has built a high-quality digital eco-system over the past three years and is now in a strong position to consolidate and grow its brand via national brand marketing. We know brand awareness is critical for driving trust and demand for a digital marketplace business. We look forward to working with the Mad Paws team to help them become a household name across Australia.”
In H1 FY24, Mad Paws’ operating revenues reached $14.7 million, marking a 22% increase from the previous corresponding period (PCP). Within this, its marketplace operating revenue surged by 29% on PCP, totalling $4.3 million, while e-commerce revenue climbed to $10.4 million, reflecting a 19% increase on PCP. Group EBITDA saw an 85% improvement from a loss of $2.5 million in H1 FY23 to $399k in H1 FY24. Mad Paws pulled the shutter on its unprofitable lightly cooked and raw product lines in its Dinner Bowl business in FY23. Since then, it has focused on growth investments and its e-commerce arm.
Within its agreement with Seven, Mad Paws can invest an additional $4 million in advertising over 24 months, following the initial $5.25 million investment. If exercised, it will involve issuing new shares to SWM at a price based on Mad Paws’ 30-day VWAP, ranging from $0.12 to $0.25 per share.
Alinda is a Business Reporter for The Sentiment
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