180 Markets Weekly Capital Raising Wrap
Is Environmental, Social and Corporate Governance (ESG) investments the newest hot trend?
One of the biggest market thematics we are seeing is the strong emergence of Environmental, Social and Corporate Governance (ESG) investments. People are looking to be good corporate citizens in addition to earning a dollar and we see no signs of abatement.
One of the largest components of ESG investing is clean energy. Clean energy has been in vogue for a number of years, now, and shown an even stronger acceleration with the newly elected U.S. Biden administration and Australian governmental policy support.
But, what does this mean for Capital Raisings?
In short, there is plenty of new money around for those energy companies who can easily fit into any ESG mandate. We are seeing heavy interest in the likes of hydrogen and uranium with virtually every Share Placement being oversubscribed.
Whether the company is in the very early exploratory phase or nearly in production, investors, both institutional and individual, have appetite. Of course, there is debate about the longer term winners and losers, whether we should support a blue or green type of hydrogen and the cost/benefit analysis of various policies. However, if the business has a good story to tell, capital markets are wide open.
What’s the Technical Trend?
As the overall markets have entered into a period of somewhat sideways direction, there is a lack of big energy immediately post capital raisings. Whereas virtually every Offering opened up sharply during the first quarter, share prices are significantly muted the past number of weeks. Whether this trend continues is pure guesswork but we continue to monitor conditions carefully.
HOT PLACEMENTS OF THE WEEK
Black Cat Syndicate (ASX: BC8) raised 20.0m via a placement through Petra Capital. In a positive sign, the board will seek shareholder approval to issue themselves another 1.44m worth of stock. Funds will be used to fund their low CAPEX, rapid start up strategy for the Kal East Gold Project.
New World Resources (ASX: NWC) raised 20.0m via placement to accelerate the development of its Antler Copper Project. The two-tranche placement was conducted at 10.0c per new share, which represented a 9.1% discount to the last closing price prior to the placement, but a premium of 9.3% to the 30-day VWAP. Canaccord Genuity were lead manager on the raise, with Petra Capital acting as Co-Manager.
Race Oncology (ASX: RAC) raised 5.4m in an equity placement and will include a bonus option issue to existing shareholders. Race’s CEO and Managing Director, Phil Lynch commented, "this new funding supports efforts to deliver outsized returns to shareholders via our Three Pillar strategy, where we are investigating Bisantrene as both a potential precision oncology agent, and as a heart-friendlier chemotherapeutic". Merchant Opportunities Fund were cornerstone investors to the placement.
Magnum Mining and Exploration (ASX: MGU) raised 6m through a placement of 40 million shares at 15.0c per share. In what is always viewed as a positive sign, Magnum directors Matt Latimore and Don Carroll will also invest up to $250,000 each on the same terms as placement participants subject to shareholder approval. Shape Capital acted as sole lead manager to the placement.
At 180 Markets, we have noticed a reduction in the amount of capital raises over the past few weeks. It appears that at the end of 2020 and start of 2021, companies took advantage of a stronger marker to raise capital. By way of comparison, in November 2020 over 90 placements took place on the ASX. Whereas, in April 2021 77 placements took place.
Currently there are 5 stocks halted for a capital raise. Walkabout Resources (ASX:WKT), Oventus Medical (ASX: OVN), Australian Rural Capital (ASX: ARC), Inventis (ASX: IVT) and New Age Exploration (ASX: NAE) still remain in a trading halt.
Thinking about taking the leap to an IPO? Here's what we know
In the past two weeks, we have seen some large premiums on IPOs compared to issue price, particularly in companies with smaller market capitalisations. Black Canyon (ASX: BCA) and Albion Resources (ASX: ALB) had a market capitalisation of $8.77M and $8.80M respectively at issue price.
Black Canyon (ASX: BCA) performed strongly on listing day, reaching a high of 33.0c, which represented a 65% premium to its issue price. Whilst Albion Resources (ASX: ALB) also performed strongly on open, reaching a high of 26.0c, a 30% premium to its issue price of 20.0c.
There are a number of IPOs which are due to list in the next week:
- Flynn Gold Limited (ASX: FG1) - Monday May 10, 11am
- Hiremii Limited (ASX: HMI) - Tuesday May 11, 12pm
- EP&T Global Limited (ASX: EPX) - Wednesday May 12, 11am
- Juno Minerals Limited (ASX: JNO) - Thursday May 13
- Audeara Limited (ASX: AUA) - Friday May 14
- Australian Clinical Labs Limited (ASX: ACL) - Friday May 14, 12pm
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Greg is Co-founder of 180 Markets which gives access to Australia's hottest IPOs and Placements. Previously Greg has spent over 20 years as a professional hedge fund investor, including with P Schoenfeld Asset Management and Credit Suisse, in...