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How insiders or major shareholder use capital raising to lift holding


June 20, 2025

One of the sneakiest way for insiders or major shareholders to increase their control over a company is by under-writing a non-renouncable capital raising where retail investors are not allowed to apply for any of the shortfall shares. Or, they can simply be allocated chunks of new shares in a placement. Here are a few examples of major players climbing a share register during a capital raising, rather than buying on market like everyone.

29 Metals (29M), December 2024: went into a trading halt at 9.55am on December 3 The AFR's Street Talk column broke the news at 11.48am that it was seeking $180m to restructure its debt, fund development of its new Gossan Valley mine and spend another $40m trying to remove water from its shuttered Capricorn copper mine in Queensland. The 62 slide investment pack landed on the ASX at 4.58pm and it remained suspended until the morning of Thursday, December 5. The structure comprised a $47.4m placement and a $132.6m 1-for-1.43 non-renounceable at 27c, a hefty 27% discount to the last close of 37c. Australian Super and BUMA committed to take up their entitlements and under-write a further $102.1m of any shortfall which would lift their holdings to 18% and 20% respectively. Owen Hegarty's EMR Capital did not participate and was diluted down to 23%, losing control. The accelerated component raised $154m and the long-suffering 5,000 retail shareholders were tapped for $26.5 million via this 112 page offer document but they were been banned from applying for any additional shortfall shares, so that Australian Super and BUMA could pick up more stock. The retail offer only attracted around 675k in applications. Jardine and Macquarie are the under-writers of this appallingly structured deal. The stock was at 24c on January 6 giving it a market cap of just $335m after the $180m raise. Aussie Super disclosed a 17.1% holding on December 12, the same day Indonesia's BUMA group emerged with 19.5% which later rose to the maximum 19.9% after the retail shortfall was allocated. Grilled the board on all these issues at the 2025 AGM.

Australian Finance Group (AFG), 2020: $60 million raising comprising a $15 million placement at a 17.3% discount of $1.15 followed by a non-renounceable 1-for-5.5 at $1.15 with certain insiders partially under-writing the retail offer. Retail can't apply for overs which is a bad thing, particularly with insiders under-writing the guaranteed shortfall. The retail offer was only 78% subscribed with $10.1 million raised and an additional $2.96 million coming from the under-writers. With the shares at $1.70 when the retail outcome was announced, this ended up being heavily dilutive for retail investors when combining the impact of the placement, the size of the discount and the retail shortfall.

Bellamy's, 2017:
$60m raising with $45m from retail in June-July 2017. Was a 5-for-38 at $4.75 and the institutional component was only $14.3 million. Hedge fund on the board under-wrote but they allowed 25% of entitlement overs which got them to 98% take up. See conclusion announcement. Stock back to $8 by October so a very cheap offer and only a small component went to chairman's hedge fund. This announcement from Janchor suggests it picked up $4m worth of stock as under-writer on July 4.

Challenger Diversified Property Group: retail investors were limited to overs equivalent to 50% of their entitlement, UBS was the under-writer and controlling shareholder Challenger Financial Services was able to lift its controlling stake to 46% at a discount courtesy of an $8 million shortfall.

Charter Hall (CHC): applied for $23,200 worth of shares at 33c in entitlement offer but scaled back to virtually nothing because billionaire John Gandel scooped up the entire retail shortfall. See announcement.

Galan Lithium (GLN), June 2025: $20m two-stage placement to a clean energy fund at 11c, a 22% premium to the previous close of 9.1c. The bulk of it is subject to due diligence and shareholder approval. Funds are needed to advance its Argentinian lithium project.

Harvey Norman (HVN), 2014: Gerry Harvey made a quick $1m+ profit from his retail investors after personally under-writing a heavily discounted $120.7 million 1-for-22 non-renounceable offer at $2.50 in 2014. See outcome announcement explaining how he picked up 1.463 million cheap shares after a majority of retail investors declined to participate. See Crikey story.

Macquarie Atlas Roads: Macquarie Group is the largest shareholder with 14% and is represented on the board. It exclusively under-wrote a $450m 1-for-6.62 raising at $5.12. The stock traded at around $5.38 through the offer period. The retail offer

Mirrabooka (MIR), June 2025: 1-for-7 non-renounceable at $3.06 to raise up to $85 million with unlimited overs. The pricing was equivalent to the current NTA and a 5% discount to the previous close of $3.22. The outcome announcement was a bit threadbare, only revealing a 119% application rate ($101.15m) with no break down between entitlements and overs. How many of the 7,869 shareholders participated and what was the breakdown between entitlement applications and overs? They had much better disclosure after the 2022 SPP, which came following a direct email request. The scale back formula for the $16 million refunded was not disclosed but the outcome announcement said the board strived for a "fair and equitable allocation outcome" by "having regard to the existing shareholding" of applicants. This presumably meant big allocations for its largest holders such as their LIC stablemates AFIC (4.51%) and Djerriwarrh (2.18%) and their former chair Terry Campbell (1.7%), assuming they applied for overs. See top 20 on page 49 of latest annual report. AFIC announced it had moved to 6.86% after spending $20m buying 6.534m shares in the capital raising.

Virgin Australia, 2013: the 3 controlling shareholders Air New Zealand, Etihad and Singapore Airlines collectively picked up an additional $51.6 million in Virgin Australia shares courtesy of the shortfall on the $69 million non-renounceable retail offer at 38c where "overs" were limited to 40% of entitlement: See Crikey story.

Others to add: MacMahon Holdings