Amid global uncertainties, including Vladimir Putin’s war in Ukraine, rising inflationary pressures and COVID, this week saw the brakes on raising capital, with only a scattering of companies announcing they were looking for funds.
Small Cap Gold Players Westgold Resources (WGX) that has a market capitalization greater than $1 billion; Pantoro Ltd (PNR) (nearly $480 million); with microcaps Global Lithium Resources Ltd (GL1) ($285 million) and Structural Monitoring Systems (SMN) ($116.6 million) joined the capital-raising mix this week that was otherwise comprised of nanocaps — companies with less than $50 million in market capital.
One of these small companies, Australian Milk Nutritional Group (AHF) raised $4.5 million in a placement with IJ Funds Management, following news its infant formula lines will be sold at Chemist Warehouse stores and a distributor has been appointed in China. Interestingly, investor IJ Funds will receive $75,000 each month in exchange for advisory services to drive sales across Asia.
This Week Deal Room Explored Anteris Technologies (AVR) recent injection of capital from its new number one shareholder, the investment management company, Perceptive Advisors.
In doing so, AVR earns approximately $28 million in capital to continue human trials of its 3D one-piece aortic heart valve replacement.
CEO Wayne Paterson said Perceptive researched the investment opportunity and got the shares at a 20% discount.
“These big funds are taking a huge cut, they want a rebate in the market,” he said.
“If you consider that I would have made this trade at $6 (per share) eight weeks earlier, I was absolutely thrilled to have them at $15.
“They didn’t try to push me too hard on anything, there were no mandates or backing options – I think it was an exceptional deal.
“These are long-term investors, they often go for 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 today has a market capitalization of $245.4 million and trading in the stock opened at $18.
There was another story with the insurer of New Zealand and the Pacific Islands Tower Ltd (TWR) this week. He did not go to the market to take capital, but to return it to shareholders.
Shareholders received 72c (NZD) for every 10th share held – but those shares were later to be cancelled, under the NZ$30.4million scheme.
Paul Johnston said the company had excess capital.
“The board and management thought it would be prudent to return excess capital to shareholders, so that’s what we did (Wednesday),” he said.
“By returning capital to them, it proves to our shareholders that they should be right to trust Tower, that we are a well-capitalized company and that we are a good, positive investment for them.”
The tower has a market capitalization of $246.66 million and trading in the shares opened at 65.5c this morning.
There have been just over 20 IPOs so far this year and today WA family wholesaler and retailer Catalano Seafood Ltd (CFS) makes its market debut. It fell from its issue price of 20c and was trading at 18.5c (12.30pm WST). The company raised $5 million through the IPO process.
We’ll be posting 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 trading after raising $45 million at $1.38. The stock has so far hovered within pennies of that price.