Capital Raises Weekly Wrap - 13/12/2021

As the holiday season rears its seasonal head, capital raising activity has picked up significantly in the second week of December as companies look to close out the year by maximising funds raised despite a cyclically waning level of demand from investors.

There were 25 companies from 7 different sectors raising via placements across the market, with a staggering $1.22b raised in the last week. There were several substantial placements which were largely responsible for this capital raising figure, which we've gone into further detail below in our wrap. The average discount was 10.38%, a decrease from prior weeks which given the amount of funds raised in the last week, suggests that investor demand isn't falling off as sharply as previously thought. A market observation shows that in the past week (6 December to 10 December), the S&P/ASX 200 Index has risen by 1.5% off the back of optimistic market sentiment stemming from the Omicron variant and tapered inflation fears.

As a lower discount rate may indicate that companies are confident in raising the required funds, it's also worth looking at the type of placements that have taken place in the last week as attractive raises from reputable companies tend to be well subscribed no matter the market. Given that 3 placements were responsible for $929.5m of funds raised last week, we are curious to look into these placements further to assess whether they've had a disproportionate impact on our analytics today. *Placements from 7 December to 13 December

Sector Overview

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

Placement Overview

The sector rankings paint an interesting picture, as materials returns as the frequency leader for the week with 11 companies raising via placements on the market. The health sector emerged as the overwhelming leader in funds raised with a staggering $688.3m raised, and the health sector following after with a respectable $212.75m raised via placements on the market. Check out our overview of the 3 placements that were responsible for $929.5m of funds raised last week (76%). We were curious to see whether these placements were discounted lower when compared to the market as a function of how well subscribed they were, as well as if they were highly demanded by investors.

1. $642m Placement from EBOS Group Limited (ASX:EBO) EBO is a Australasian company that distributes, wholesales and markets healthcare, medical and pharmaceutical products and is dual listed on the ASX and NZX. The company raised $642m via a fully underwritten placement at a discount of 5.5% to the closing price on 8 December 2021. Funding is to be used towards the acquisition of LifeHealthcare to accelerate EBO's medical devices strategy and create a platform for EBO to capitalise on future growth opportunities. EBO's stock price is currently up 30.37% YTD which supports the high level of investor demand for the placement despite the smaller discount rate.

2. $187.5m Placement from Johns Lyng Group (ASX:JLG) JLG is an integrated building services group that delivers building and restoration services across Australia and internationally, with the core business surrounding the company's ability to rebuild and restore a variety of properties after damage by insured events. The company raised $187.5m via a fully underwritten placement at a discount of 1.96% to the closing price on 6 December 2021. Funding is to be used towards the acquisition of Reconstruction Experts (RE), associated transaction expenses and to maintain financial flexibility to fund near term growth initiatives. JLG's stock price is currently up 157.76% YTD which supports the level of investor demand for the placement despite the minuscule discount rate.

3. $100m Placement from Firefinch Limited (ASX:FFX) FFX is a gold mining and lithium development company that owns an 80% interest in the Morila Gold Mine, and 100% of the Goulamina Lithium Project. The company raised $100m via an oversubscribed placement at a discount of 11.3% to the closing price on 8 December 2021. Funding is to be used towards the production growth at the Morila Gold Mine as well the facilitation of the proposed demerger of the Goulamina Lithium Project into a seperate ASX listed company. FFX's stock price is currently up 276.32% YTD which supports the level of investor demand for the placement. The discount rate is still higher than the market average which may be a reflection of the inherent uncertainty of gold mining and resource exploration.

It's certainly interesting to dive into these relatively larger placements which tend to skew the analytics we have for the overall market, as discount rates and investor demand go hand in hand with the prior performance of the company and the perceived quality of these raises from a market perspective. We look eagerly ahead for next week to see whether firms will aggressively slow down activity as well as the absence of these unsystematic larger placements from well-established firms which typically don't raise as frequently as the rest of the market does.

Join us next week and keep an eye out for our monthly newsletter as well to stay up to date with the capital raising market, as well as what we're doing at Fresh. If you have any questions for us, feel free to reach out to us at clients@freshequities.com

90 Days Post Placement Performance

Looking back on the past 90 days to see how companies have performed post placement takes us to the first week of August, with 26 placements undertaken.

Alligator Energy Limited (ASX:AGE) was the standout performer for this week, with an impressive 85.91% 90 days post raise.

Best Performers

• Alligator Energy Limited (ASX:AGE) peaked at an incredible 289% increase 35 days post raise before sharply settling down to an impressive 85% increase 90 days post raise.

• Imugene Limited (ASX:IMU) saw a relatively steady rise to a substantial 68% increase 90 days post raise.

• Frontier Resources Limited (FNT:ASX) saw a frothy peak of 146% increase 74 days post raise before sliding down to respectable 59% increase 90 days post raise.

Worst Performers

All our worst performers for this week's review were relatively slow and steady in their 90 days post raise performance.

• Pointsbet Holdings Limited (ASX:PBH) saw a positive sideways move before dropping on day 63 to end at a 31.51% decrease 90 days post raise.

• Sensera Limited (ASX:SE1) saw a similar sideways pattern until day 51 to end at a substantial decrease of 56% 90 days post raise.

• West Wits Mining Limited (ASX:WWI) stayed relatively uneventful in it's journey to a 45% decrease 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