Vicinity, Iress and Arena REIT steal this show: this week in capital markets

Ben Williamson

Fresh Equities

The recovery rally continues. There was quite a bit more for followers of capital markets to sink their teeth into this week. Just over $1.5b was raised across 30 placements.

Three raises dominated the tally and headlines this week:

  • Vicinity Centres (VCX) raised $1.2b;
  • Iress (IRE) raised $150m; and
  • Arena REIT (ARF) raised $60m

Investors in all three were greeted by positive price movements following the announcement of the raise. Iress is now trading up 10% from the placement price, Vicinity is up 15% and the Arena REIT is up 6.5% - not bad at all to be 10-15% up on day one! 

We are noticing that this sort of market reaction to a capital raise is more common now vs. 6 months ago. The majority of affected companies have been treated as cum-raise by investors since the pandemic started so when the pressure is released (through a raise), momentum returns. Followers of these capital raises should remember that price pressure is as much about the buy-side as it is the sell-side. When investors smell a raise coming it won't always be selling that keeps price down, but the buyers who are now sitting on the sidelines waiting for discounted shares. 

On Tuesday, Arena set out to raise $50m but quickly upsized to $60m. The enlarged placement showed signs of stronger than expected support from existing institutions. All existing institutional holders were allocated their bid "in full" and there was room for new investors. Other shareholders were given the opportunity to acquire the discounted shares through a $10m SPP, conducted at the placement price. 

The Vicinity Centres raise is further evidence that commercial property holders are hurting. In response to COVID-19, Vicinity has now withdrawn guidance, removed their distribution (think dividend) for the current half and discussed a write-down of $1.8b - $2.1b from the value of their portfolio. Green shoots are starting to emerge: foot traffic is increasing, rent receipts should improve commensurately and investors were more than to happy to support the $1.2b raise! 

We noticed in the Vicinity raise documentation that the $200m follow-on SPP was accompanied by the following note - "The relative size of the Placement and the target size of the SPP has been structured to reflect the split between the aggregate securityholdings of institutional and non-institutional securityholders." This must be a welcome inclusion for non-institutional holders who are to be given a fair crack at the opportunity to average down. 

Get investment ideas from industry insiders

Liked this wire? Hit the follow button below to get notified every time I post a wire. Not a Livewire Member? Sign up for free today to get inside access to investment ideas and strategies from Australia’s leading investors.

This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service by Fresh Equities Pty Ltd, its representatives or any other third party regardless of whether such security, product or service is referenced.

Ben Williamson
CEO & Co-founder
Fresh Equities

Ben is the co-founder and CEO of Fresh Equities, a tech start-up helping sophisticated and wholesale investors get access to the majority of listed capital raises.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.