Pendal (ASX: PDL) share price slips on capital raising efforts

The Pendal Group Ltd. (ASX: PDL) The stock price is declining today after providing an update on its capital increase.

As of this writing, the fund manager’s shares are trading for $ 7.17, down 2.3%.

What did Pendal announce?

Investors are heading for the hills after Pendal shares came out of a trading stop today.

In this morning’s press release, Pendal announced that it has completed a fully subscribed institutional placement. The offer generated considerable interest in which new and existing institutional investors participated to raise $ 190 million.

Pendal will issue approximately 27.9 million common shares as part of the offering, representing approximately 8.6% of its total issued capital. The price of each share is set at $ 6.80 each, reflecting a reduction of 5.2% from the last dividend-adjusted closing price of $ 7.17.

The newly created shares will be issued using the existing investment capacity of the company. Under Listing Rule 7.1, this allows up to 15% of its shares to be issued without shareholder approval. The company noted that the issued shares would not be eligible for the S1 FY21 interim dividend declared yesterday.

The money raised through the placement will partially finance the acquisition of Thompson, Siegel & Walmsley LLC. Pendal has agreed to take over the investment management company for a price of $ 320 million. This will be paid for by a combination of Pendal’s equity, debt and existing capital reserves.

Pendal Group CEO Nick Good commented:

The response represents a clear endorsement of the strategic acquisition of TSW by Pendal, a company that is highly complementary to Pendal. The acquisition will accelerate our growth opportunities in the US market and provide scale and diversification advantages for Pendal across investment capacity, asset classes, geographies and distribution channels.

It is expected to bring significant benefits to Pendal shareholders, enhancing diversity in earnings and growing shareholder returns.

Settlement of the placement is scheduled for Thursday, with the new shares available for trading the next day.

Pendal share price review

It has been a mixed year for Pendal stocks, going in circles for most of the 12-month period. Recently, however, the company’s shares hit a 52-week high of $ 7.80 before falling likely due to profit taking.

The Pendal share price is around 20% higher from the same time last year and is up 12% from performance since the start of the year.