Amidst global uncertainties including Vladimir Putin’s war in Ukraine, increasing inflationary pressures and COVID, this week saw the brakes on capital raising, with only a scattering of companies announcing they’re seeking funds.
Small-cap gold players Westgold Resources (WGX) which has a market cap above $1 billion; Pantoro Ltd (PNR) (nearly $480 million); along with micro caps Global Lithium Resources Ltd (GL1) ($285m) and Structural Monitoring Systems (SMN) ($116.6 million) joined the capital raising mix this week that was otherwise made up of nano caps – companies with market capital below $50m.
One of those smaller companies, Australian Dairy Nutritionals Group (AHF) raised $4.5 million in a Placement with IJ Funds Management, in the wake of news its infant formula ranges will be sold through Chemist Warehouse stores and a distributer had been appointed in China. Interestingly, the investor IJ Funds will get $75,000 back each month in return for providing consultancy services around boosting sales throughout Asia.
This week Deal Room explored Anteris Technologies’ (AVR) recent capital injection from its new number one shareholder, investment management firm, Perceptive Advisors.
In doing so, AVR gains about $28 million in capital to continue human trials of its 3D single piece aortic heart valve replacement.
CEO Wayne Paterson said Perceptive sought the investment opportunity and were granted the shares at a 20 per cent discount.
“These big funds take a huge stake, they want some discount to market,” he said.
“If you consider that I would have been doing this deal at $6 (per share) eight weeks earlier, I was absolutely thrilled to have them at $15.
“They didn’t try and push me too hard on anything, there were no warrants or options accompanying – I think it was an outstanding deal.
“These are long term investors, they often go 10 years with their companies. We’re going to go all the way with this particular fund, so we’re really happy to have them on board.”
The company has a market cap today of $245.4 million and share trade opened at $18.
There was a different story with New Zealand and Pacific Islands’ insurer Tower Ltd (TWR) this week. It didn’t go to market to take capital, but to give it back to shareholders.
Shareholders were granted 72c (NZD) for one in every 10 shares held – but those shares were then to be cancelled, under the NZD$30.4 million scheme.
Paul Johnston said the company had a surplus of capital.
“The board and the management thought it would be prudent to return excess capital to shareholders so that’s what we did (on Wednesday),” he said.
“By returning capital to them, it proves to our shareholders that they should be right to have confidence in Tower that we’re a well-capitalised business and we’re a good positive investment for them.”
Tower has a market cap of $246.66m and share trade opened at 65.5c this morning.
There have been just over 20 IPOs so far this year and today WA family-run wholesaler and retailer Catalano Seafood Ltd (CFS) debuted on market. It has dropped from its 20c issue price and was trading at 18.5c (12.30pm WST). The company raised $5 million through the IPO process.
We’ll upload a Deal Room interview with CEO Nick Catalano early next week.
The other company to join the ASX this week was US Student Housing REIT (USQ), which began trade after raising $45 million at $1.38. The stock has so far hovered within a few cents of that price.