Get a FREE subscriber login and read more articles
Public

Why ASA wants a single bookbuild in renounceable capital raisings

Under ASA voting guidelines, ASA's preference is for ASX 200 companies to raise capital through a renounceable pro-rata entitlement offer with a single bookbuild to sell the shortfall. The tables below demonstrates why ASA has lost faith in the system of separate bookbuilds because it is now clear that non-participating institutional shareholders generally receive a higher price for their entitlement if there is an earlier bookbuild through an accelerated capital raising. As you can see, retail does better than institutions on about half as many times as the opposite experience.

Slater & Gordon was one of the worst examples we’ve seen with institutions collecting $1.13 on a $6.37 offer, but when it came time to sell off the retail shortfall, the compensation slipped to just 1c. ASA members can read the full article in the May 2014 edition of Equity magazine explaining why this happens.

The second table compares the PAITREO (Prorata Accelerated Insitutional Tradeable Rights Entitlement Offer) which uses the dual bookbuild structure but allows for rights trading during the retail offer period. ASA is supportive of thisAs you can see from the results, retail performed about the same or better than institutions in more than half the offers. 

For corrections or additions to this list please add a comment below or email annalau@asa.asn.au.

Separate institutional and retail shortfall bookbuilds (AREOs - Accelerated Renounceable Entitlements Offers)

Company Year Total amount
raised
Components Participation Terms of
offer
Premium returned
Institutional Retail Insto Retail Institutional Retail
Slater & Gordon 2015 $890m $770m $120m 80% 40% 2-for-3 at $6.37 $1.13 1c
APA Group 2014 $1.83bn $860m $970m 93% 61% 1-for-3 at $7.65 $1.05 $1.00
Billabong 2014 $50m $19m  $31m  95% 77% 3-for-8 at $0.28 35c 19c
Bank of Queensland 2014 $400m $183m $217m 95% 57% 3-for-26 at $10.75 $1.30 $1.15
Affinity Education 2014 $75m $53.4m $19.6m 99% 71% 3-for-4 at $1.12 18c 13c
Transurban 2014 $2.34b $1.79b $557m 95% 65% 10-for-43 at $6.75 25c 46c
Mermaid Marine 2014 $217m $100m $117m 89% 10% 7-for-18 at $2.40 10c 0c
ASX Ltd 2013 $553m $267m $286m 96% 75% 2-for-19 at $30.00 $3.70 $3.40
ALS Ltd 2013 $246m $112m $134m 92% 78% 1-for-11 at $7.80 95c 95c
Echo Entertainment 2012 $458m $266m $192m 95% 67% 1-for-5 at $3.30 80c 82c
Energy Resources Australia 2011 $500m $380m $120m 99% 60% 12-for-7 at $1.53 47c 12c
Origin Energy 2011 $2.3b $1.13b $1.17b 95% 79% 1-for-5 at $13.00 $2.00 $2.80
Transpacific 2011 $311m $267m $44m 97% 66% 9-for-14 at $0.50 12c 22c
Boral 2010 $492m $280m $212m 92% 40% 1-for-5 at $4.10 55c 15c
Tabcorp 2010 $430m $238m $192m 95% 55% 1-for-9 at $6.25 $1.05 $0.90
ALE Property Group 2009 $105m $64m $41m 56% 90% 1-for-2 at $1.50 50c 41c
Sigma Pharmaceutical 2009 $297m $134m $163m 80% 32% 1-for-3 at $1.02 5c 0c
Connect East 2009 $424m $309m $115m 87% 38% 1-for-2 at $0.365 3.5c 0.5c
Orica 2008 $900m $604m $296m 70% 50% 1-for-8 at $22.50 25c 10c
FKP (Aveo Group) 2009 $324m $204m $120m 97% 46% 2.3-for-1 at $0.40 6c 0c
Wesfarmers 2008 $2.57b $970m $1.6b 96% 64% 1-for-8 at $29.00 $8.25 $9.75
Alumina 2008 $910m $644m $266m 92% 53% 5-for-19 at $3.00 70c 35c
Primary Health Care 2008 $1.23b $958m $287m 80% 20% 8-for-5 at $5.40 $1.20 $0.10
Westfield 2007 $2.96b $2.29b $673m 83% 40% 2-for-23 at $19.50 10c 0c
Lihir Gold 2007 $1.19b $978m $212m 99% 71% 1-for-3 at $2.30 50c 85c
Newcrest 2007 $2.04b $1.586b $456m 96.5% 80% 7-for-20 at $17.40 $5.85 $10.60
* including applications for additional shares

Separate bookbuilds but with rights trading (PAITREOs - Prorata Accelerated Institutional Tradeable Rights Entitlements Offers)

 

Company

Year

Total amount raised

Components

Participation

Terms of offer

Premium returned

Institutional

Retail

Institutional

Retail

Institutional

Retail

Vocus Communications 2016 $652m $230m

$222m

97% 66% 1-for-8.9 at $7.55 $0.87 $0.95
Transurban 2015 $1.025b $738m $288m 90% 70% 1-for-18 at $9.60 $0.50 $0.30
Santos 2015 $2.5b $1.17b $1.35b 86% 57% 1-for-1.7 at $3.85 $0.75 $0.25
Origin Energy 2015 $2.5b $1.35b $1.2b 92% 67% 4-for-7 at $4.00 $1.20 $1.35
Treasury Wines 2015 $486m $368m $119m 89% 57% 2-for-15 at $5.60 $1.10 $1.16
Westpac 2015 $3.5b $1.6b $1.9b 95% 70% 1-for-23 at $25.50 $4.50 $4.00
Commonwealth Bank 2015 $5.1b $2.1b $3b 90% 50% 1-for-23 at $71.50 $6.50 $2.00

National Australia Bank

2015

$5.5b

$2.7b

$2.8b

97%

72%

2-for-25 at $28.50

$5.30

$3.10

Tabcorp

2015

$236m

$142m

$94m

92%

70%

1-for-12 at $3.70

81c

82c

Arrium

2014

$656m

$367m

$390m

77%

4%

1-for-1 at 48c

0

Shortfall failed to clear

AGL

2014

$1.23b

$516m

$500m

95%

70%

1-for-5 at $11

$2.85

$2.25

ALS

2013

$246m

$112m

$134m

92%

78%

1-for-11 at $7.80

95c

95c

ASX

2013

$553m

$267m

$286m

96%

75%

2-for-19 at $30

$3.70

$3.40

Brambles

2012

$450m

$333m

$68m

83%

61%

1-for-20 at $6.05

45c

25c

AGL

2012

$904m

$356m

$532m

95%

75%

1-for-6 at $11.60

$2.85

$2.90

Bluescope Steel

2011

$600m

$338m

$260m

83%

48%

4-for-5 at 60c

0

0

Super Retail Group

2011

$334m

$282m

$50m

47%

46%

9-for-19 at $5.34

Shortfall failed to clear

4c

Goodman Fielder

2011

$259m

$190m

$69m

95%

60%

5-for-12 at 45c

5c

5c

Origin

2011

$2.3b

$1.13b

$1.17b

95%

79%

1-for-5 at $13

$2.00

$2.80

Comments

There are no comments. Be the first to post