May 5, 2020
Here is a list of best practice announcements by companies at the end of capital raisings in terms of disclosing information about retail shareholder participation rates.
Next DC: After a $672 million placement, they completed a $190 million uncapped SPP in May 2020 and adopted the following best practice disclosure in its SPP outcome announcement:
"The SPP offer was open to 17,015 eligible shareholders and valid applications totaling approximately $191 million were received from some 8,684 shareholders, reflecting a participation rate for those eligible shareholders of 51% and an average application amount of $22,051."
Reece Australia: After a $647 million capital raising, Reece adopted the following best practice on its SPP participation:
"1991 out of 4897 eligible shareholders participate in the SPP."
However, it did not reveal how many shareholders participated in the accompanying retail entitlement offer or how many applied for additional shares, as Webjet did a few days earlier (see below).
Cochlear: responded positively to a transparency request using the following words in its 3-page SPP outcome announcement:
"The SPP offer was made to 36,724 eligible shareholders and valid applications totaling approximately $417 million were received from 16,651 shareholders. This represents a participation rate of approximately 45% of eligible shareholders. The average SPP application amount was approximately $25,000."
Webjet: Wrapping up its $118m non-renounceable 1-for-1 retail offer in April 2020, the company responded positively to requests for extra transparency with the following words which provided more information on the "overs" component than any other issuer to date:
"The offer was sent to 24,060 eligible security holders and Webjet received 12,633 valid applications for approximate 50.4 million shares worth $86 million, implying a take-up rate of 72.7%. Webjet also received, under the top up facility, applications from 8324 retail investors for 27.5 million additional new shares in excess of their entitlement aggregating to approximately $46.7 million....All eligible applications for additional new shares will be scaled back by approximately 31%."
Carbon Revolution: After a $25 million placement they completed a $2.73m SPP in April 2020 and responded positively to a request with the following words:
"The SPP offer was sent to 3053 eligible security holders and 252 applications were received, providing a take-up rate of 8.25% of and an average application of $10,833."
Afterpay: didn't go for precise numbers but still broadly embraced the improved disclosure template with these words on January 22, 2020. They were also the first issuer to do this when imposing a scale back on an SPP:
"The SPP Offer was sent to approximately 40,000 eligible securityholders and over 15,000 valid applications were received, representing a participation rate of 37% based on the registered holdings. As the value of applications, approximately $240 million, significantly exceeded the cap of $30 million for the SPP, the Afterpay board has decided exercise its discretion under the SPP terms to scale back applications to a total of approximately $33 million." See announcement.
Westpac: adopted the new model for disclosing participation rates in the SPP with these words on December 10, 2019:
"The SPP Offer was made to approximately 618,300 Eligible Shareholders, with valid SPP applications received from approximately 40,900 Eligible Shareholders. Valid applications received represent a participation rate of approximately 7% of Eligible Shareholders with an average SPP Application amount of around $18,850. The final amount raised of $770 million excludes approximately $68 million of withdrawal requests accepted from approximately 3390 Eligible Withdrawal Applicants." (Those who had applied before the AUSTRAC litigation was launched).
Costa Exchange:
Responded positively to a request to include the following data on retail rights trading in this announcement on November 21, 2019:
"Retail entitlements worth approximately $3.8 million were traded on the ASX between Wednesday, October 30, 2019 and Monday, 11 November 2019, in a range between 34c and 67c. The VWAP for retail entitlements traded during this period was 54c."
AMP: partially adopted the new model for disclosing participation rates in the SPP with these words on September 10, 2019 but didn't disclose low percentage of 2.1% and rounded up the participation number:
"The SPP was sent to 713,273 eligible share holders, with valid applications received from approximately 15,000 shareholders and an average application worth A$10,000."
AMP reported that it had 738,817 shareholders in May 2019, so 96.5% were eligible for the SPP.
Transurban: adopted the new model for disclosing participation rates in the SPP with these words on September 4, 2019:
"The SPP offer was sent to 117,291 eligible security holders and Transurban received valid applications from approximately 23,460 eligible security holders. The applications received represented a participation rate of 20% of eligible security holders and equates to an average application amount of $13,292."
Transurban reported that it had 117,707 shareholders in August 2019 so 99.64% were eligible for the SPP.
Abacus Property Group: adopted the new model for disclosing participation rates in the SPP with these words on August 28, 2019:
"The SPP offer was sent to 5,867 eligible securityholders and valid applications totaling $4.3 million were received from 392 holders. This represents a participation rate for those eligible securityholders of 6.7% and an average application worth $11,001."
Growthpoint: adopted the new model for disclosing
participation rates in the SPP with these
words in July 2019:
“The SPP offer was sent to 3,958 eligible securityholders
and 1,672 applications were received, providing a take-up rate of 42.24% and an
average application of $14,086.”
GPT: lifted a $50 million cap on its SPP to $66.8 million and then used these excellent words in the outcome announcement:
“The SPP offer was sent to 31,781 eligible Security holders and valid applications were received from 5,980 Security holders. This represents a participation rate of 18.8% and an average application worth approximately $11,170.”
GPT reported it had 32,614 shareholders in March 2019 so 97.44% of shareholders were eligible for the SPP.
Mirvac: see this announcement in July 2019 which included the following key paragraph:
“The SPP offer was sent to 24,158 eligible Security holders and valid applications totalling $46.2 million were received from approximately 3,386 Security holders. This represents a participation rate for those eligible Security holders of 14 per cent and an average application worth $13,600.”
Mirvac reported it had 24,183 shareholders in August 2019 so the offer was sent to 99.9% of shareholders.
Dexus: voluntarily set a new benchmark for transparency and data disclosure in their announcement in June 2019 by including this paragraph:
“The SPP offer was sent to 26,774 eligible Security holders and valid applications totalling $63.9 million were received from approximately 4,640 Security holders. This represents a participation rate for those eligible Security holders of 17.3 per cent and an average application worth $13,800.”
Dexus reported in August 2019 that it had 26,175 eligible shareholders so somehow the SPP was sent to 102.3% of eligible holders.
APA Group: Announced that 19,800 of their 75,000 shareholders applied to participate in a 2018 PAITREO and also did well revealing the size of the retail shortfall the night before the auction. However, no information was provided on retails rights trading.
Woodside Energy: After email requests, it was great to get a positive response which saw Transurban-style disclosure from the oil and gas giant at the conclusion of its $2.5 billion PAITREO capital raising. Woodside's 1-for-9 offer at $27 saw $1.57 billion raised from the institutional offer which was 90% subscribed. The shortfall cleared at $29.60 giving $2.60 to non-participants. The $930 million retail offer retail offer opened on February 21 and rights trading ran from February 19 until February 28. Best practice set by Transurban saw Woodside make this ASX announcement, disclosing the size of the retail shortfall before the auction. It was 40% or 14.4 million entitlements costing $389 million. The announcement also revealed that $12 million worth of rights were traded in a range between $1.12 and $2.58.
Transurban: It is always pleasing to see new levels of transparency in the public company space and this announcement from Transurban on January 29, 2018 set a great benchmark. After making a specific request for additional disclosure of Transurban, we loved this response from the company because never before had there been such detail revealed on capital raising participation. When chronic non-participation by retail investors in capital raisings is a major problem, we need more data on what steps need to be taken to both lift participation and ensure non-participants are compensated fairly when diluted.
Transurban revealed that 53,800 shareholders applied for $395 million shares, comprising 72% of the $554 million worth of new shares on offer in the PAITREO. Even better, was this statement: “Retail entitlements worth approximately $7.5 million were traded on the ASX between 15 December and 17 January in a range between 26c to $1.75. The volume weighted average price for retail entitlements traded during this period was 88 cents.”
No issuer had ever summarised the outcome of rights trading in this level of detail before and we trust others will follow suit in the future.
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