Capital Raises Weekly Wrap - 06/12/2021

All eyes look forward towards the upcoming holiday season as we look back with an overview of capital raising activity in the first week of December.

The last week of placements continued an ongoing trend of lower activity, which is typical for capital markets in the final months of the year. There were 14 companies from 6 different sectors raising via placements across the market.

A surprising $669.58m was raised in total which seems to go against the trend of lowering activity, but a closer examination reveals that the majority of this activity came from a single raise from Liontown Resources Limited (ASX:LTR) who accounted for 74.5% of the weeks activity by itself.

The average discount was 14.73%, an increase from prior weeks which may indicate companies are raising discount rates. This can be seen as a method of ensuring they raise the capital required by better motivating investors with an attractive raise. It's safe to say that the end of the year will be a formative time for equity capital markets as well as the wider economy, with several extenuating factors supporting increased volatility in recent weeks.

The introduction of a new coronavirus variant, interest rate uncertainty and the holiday cooldown period has market participants keenly observing on the sidelines for the transition to 2022. *Placements from 30 November to 6 December

Placement Overview

The sector rankings have reverted to baseline with materials returning to the number one spot, with a massive $498.9m raised across 7 placements. This was almost entirely achieved through a substantial placement from Liontown Resources Limited (ASX:LTR) and a smaller placement from Dacian Gold Limited (ASX:DCN), which we've reviewed in-depth below.

1. $450m Placement from Liontown Resources Limited (ASX:LTR) Liontown Resources Limited is a battery metals exploration and development company based in Western Australia. They currently wholly own four seperate battery metal projects, with plans to develop their most recent project (The Kathleen Valley Lithium Tantalum Project) into a standalone mine to align with a forecasted resurgence of the lithium-ion battery sector in coming years. The company raised $450m through a fully underwritten placement with funds to be used towards three key areas - project development, corporate & working capital costs, and exploration & study costs.

2. $20m Placement from Dacian Gold Limited (ASX:DCN) Dacian Gold Limited is an Australian gold producer with an open pit operation in Western Australia. They 100 own the Mt Morgans Gold Operation with mining activities focused in the Heffernans, Doublejay and Mt Marven deposits, as well as recently constructed treatment plants and an extensive project pipeline. The company raised $20m through an institutional placement with funds to be used towards supporting working capital in completing pre-stripping activities at the current stage of the Doublejay project, as well as accelerating exploration programs.

The consumer sector also rose the rankings into second place with a large placement from GUD Holdings Limited (ASX:GUD). The company raised $290m in total, with $120m through an institutional placement and the remainder from an entitlement offer.

• $120m Placement from GUD Holdings Limited (ASX:GUD) GUD Holdings Limited comprises a number of dynamic consumer and industrial products companies based in Australia and New Zealand. Some of these companies include Ryco, Wesfil, AA Gaskets and East Coast Bullbars. The company raised $120m through an institutional placement ($290m including the entitlement offer) with funds to be used primarily towards the acquisition of Auto Pacific Group, which marks a meaningful step in GUD's vision towards becoming an integrated leader in 4WD Accessories and Trailering in Australia and New Zealand.

We expect to see the final weeks of December cool down even further as companies look ahead to the new year for capital raising opportunities, and investors reprioritise into the holiday season. Make sure to check out our monthly newsletter where we go in depth into a market analysis, a monthly review of the capital markets, and an overview of product updates from our products team.

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Sector Breakdown

For a more detailed look at how the ASX sectors are performing check out: https://www.freshequities.com/ASX/sectors 

90 Days Post Placement Performance

Looking back on the past 90 days to see how companies have performed post placement takes us to the final week of July, with 16 placements undertaken.

Caeneus Minerals Limited (ASX:CAD) was the standout performer for this week, with an impressive 185.71% peak before settling at 85.71% 90 days post raise.

Best Performers

• Caeneus Minerals Limited (ASX:CAD) stood head and shoulders above the rest with a dual peak of 185.71% at 61 and 64 days, before pulling back to an impressive 85.71% 90 days post raise.

• Xstate Resources Limited (ASX:XST) bounced between increases and decreases over the 90 days, posting a 25% decrease at it's lowest and a 50% gain at it's high. It settled down to a respectable 25% 90 days post raise.

• Dubber Corp Limited (ASX:DUB) gained steadily for the first 37 days to peak at 44.41% before ending at 19.32% 90 days post raise.

Worst Performers

• Decmil Group Limited (ASX:DCG) showed little volatility as it crept down to a decrease of 18.75% 90 days post raise.

• Pivotal Systems Corp Inc. (ASX:PVS) gained to 18.75% 4 days post raise before starting a slow and steady slide down to 28.23% at the end of the 90 day time period.

• BARD1 Life Sciences Limited (ASX:BD1) only posted a gain for 3 days post raise before tumbling to a decrease of 30.32% 90 days post raise.

Check out our Past Capital Raises page for more information on past transactions. If you want more information on Fresh Equities and how we work, feel free to contact our team at clients@freshequities