Shares

Tracking take-up rates in non-renounceable pro-rata capital raisings


April 12, 2021

This list looks at retail take-up rates in non-renounceable pro-rata capital raisings.

IGO Ltd (IGO), 2021: 93%. announced a $1.9 billion lithium acquisition which is being partially funded by a $766 million capital raising comprising a $446 million institutional placement at $4.60 (a 9.7% discount to the previous close of $5.09) and a 1-for-8.5 non-renounceable offer to raise $320 million. The $262 million institutional component was 98% subscribed (excluding 13% shareholder Mark Creasy who only took up $20 million of his entitlement) and the $58 million retail component closes on January 15 and applicants are permitted to apply for additional shares equivalent to 50% of their entitlement. The stock was well in the money leading into the close, so the retail offer was 93% subscribed, although the announcement provided no breakdown on the overs component.

Galaxy Resources (GXY), 2020: 67.5%. $161 million raising at $1.70 (a 15% discount to the previous close of $2) comprising an over-sized $111 placement and a 1-for-14 non-renounceable to raise $50 million with applications for additional shares limited to 33% of entitlement. The accelerated component raised $124 million and the subsequent $37 million retail offer was fully under-written and received $25.1 million in applications delivering a take-up rate of 66%. This split $20.4 million in applications and $4.7 million in overs, leaving a $12 million shortfall which wouldn't have existed if overs were unlimited. With the stock finishing at $2.23, retail shareholders have once again been shafted by a heavily discounted over-sized placement. 4/10


Bank of Queensland, 2021: 60%. $1.35 billion raising to fund $1.325 billion acquisition of Members Equity, comprising a $350m placement at $7.35 and a 1-for-3.34 non-renounceable at the same price. The institutional component raised $323 million with a 98% take up and the $682 million retail offer included an overs facility capped at 35% of entitlement. The stock was above $9 leading into the close so should have been fully subscribed but timetable was so tight that many investors didn't receive the offer document in time so ended up only receiving $408 million in applications and a $274 million shortfall equivalent to 40% of the retail offer. No reminder email was sent to the roughly 57,000 shareholders who had provided BoQ with their email address.


Select Harvests (SHV), 2020: 57%. a $120 million raising to fund a $129 million almond acquisition in regional Victoria, comprising a $40 million placement at $5.20 and a 1-for-6.3 non-renounceable entitlement offer at $5.20. The pricing was a tight 4.8% discount to the previous close of $5.46 and the company claimed to have 99% participation in the $41.5 million institutional component of the pro-rata offer. The $38.3 million retail offer included an ability to apply for additional shares equivalent to 50% of entitlement but it ended up being only 57% subscribed including overs totalling $5.9 million. See outcome announcement. Stock finished the year at $5.22. 5/10.


Bega Cheese (BGA), 2020: 50.4%. agreed to buy Lion's Dairy and Drinks business for $534 million and launched a $401 million capital raising priced at $4.60 comprising a $181 million institutional placement, the maximum 15% allowable under the rules, and a $220 million 1-for-4.5 non-renounceable. The $103 million institutional component of the pro-rata offer was supported by 96% of eligible shareholders with the $117 million retail component being larger as Bega moved from a majority retail to majority institutional register. A shame it wasn't renounceable but at least retail could apply for additional shares equivalent to 50% of entitlement although this shouldn't have been capped. The raising was priced at a 9.1% discount to the previous close of $5.06 and the stock soared when trading resumed on November 27, suggesting investors liked the acquisition. Unfortunately, the $115 million retail offer fell $57 million short with just $46 million in applications and $12 million in overs. With the stock closing at $5.32 on December 18, the under-writers were enjoying a $9 million paper profit on the $57 million retail shortfall, which only existed because the board unfairly restricted the ability for retail shareholders to apply for additional shares. Stock finished the year at $5.11 so a reasonable quick profit for participants and fund manager Fidelity emerged as having picked up $27 million of the retail shortfall. 3/10


Abacus Property (ABP), 2020: 45%. a 1-for 4.8 accelerated non-renounceable at $2.90 with unlimited overs to raise $402 million. The $356 million insto component was 97% subscribed by eligible holders and the $46 million retail component finished 55% short with total subscriptions of $20.8 million, including $4.3 million through the unlimited overs facility. CEO Steven Sewell claimed to be "extremely pleased" with the retail take-up which was solid considering the shares were under-water and finished the year at $2.87. Reasonable transparency on the participation data with disclosure that 1,896 shareholders participated. 7/10.

Kazia Therapeutics (KZA), 2020: 32%. 1-for-3 non-renounceable entitlement offer at 80c to raise $25 million. Priced at a 16.7% discount to the previous close of 96c. The institutional component raised $16.4 million and the retail component capped overs at 100% of entitlement but only brought in $2.8 million or 32% with the rest being picked up by the under-writers. See outcome announcement. Stock finished the year at $1.16 so investors are well in front. 6/10

Aurelia Metals (AMI), 2020: 12%. announced a gold mine acquisition funded by a $130 million raising at 43c (a 15% discount to the last close) comprising a $41 million placement and a 1-for-4.2 non-renounceable entitlement offer with a $37 million retail component. The $52 million institutional component of the entitlement offer was supported by 92% of eligible participants and retail shareholders were able to apply for unlimited additional shares but this only attracted 10 million in applications worth $4.4 million (8 million in entitlement and 2 million in overs) so the retail offer finished 88% short. The placement was too big a component of the overall offer but at least it wasn't overly discounted. Stock finished the year at the offer price of 43c. 5/10.


Corporate Travel (CTD), 2020: raised $375 million through a 1-for-4.03 non-renounceable entitlement offer at $13.85, a 14.3% discount to the previous close of $16.16. Funds were needed to pay for a $US200 million US acquisition. Founder and CEO Jamie Pherous declined to participate and wasn't compensated for the dilution. He owns 21.27m shares so will be diluted from 19.5% to around 15%. The $262 million institutional component was 90% supported (excluding the Pherous shares) with the shortfall going to a undisclosed institutional investors. The $113 million retail offer went to around 17,000 retail investors and permitted overs of up to a maximum of 100% of entitlement. The stock soared to $17.23 when trading resumed so it looks attractive. It ended up being over-subscribed with $92 million in applications and $53 million in overs. See outcome announcement. Stock finished the year at $17.50 so a good return for participants. 7/10

Gascoyne Resources (GCY), 2020: $85 million equity raising at 2.5c comprising a $35 million placement of 1.4 billion shares and a 2-for-1 non-renounceable entitlement offer to raise a further $50 million with "overs" limited to 50% of entitlement. The stock last traded at 3.9c on May 29 before being suspended and it still the subject of a DOCA after an earlier collapse. The record gold price is bringing back the dead as Gascoyne promises a revitalised mine plan for its existing Dalgaranga project in WA, plus aggressive pursuit of a number of exploration opportunities. The retail offer attracted $17.1 million in applications and was 71.3% subscribed with the shortfall to be dealt with ahead of trading resuming in late October after a 5 month suspension. Stock finished the year at 43c after a 20-for-1 capital reconstruction so those who shelled out the $85 million at the equivalent of 50c are under water. 5/10

BCI Minerals (BCI), 2020: 1-for-2 non-renounceable offer at 24c to raise $48 million with largest shareholder Kerry Stokes taking up his full allotment. The institutional component raised $20.8 million but the $27.2 million retail only attracted $5.5 million, leaving a $20.6 million shortfall with the under-writers. There were no overs, suggesting the under-writers were quite happy to pick up the stock. Stock finished the year at 30c so a 25% return for participants. 4/10.

Pointsbet (PBH), 2020: foreshadowed a $300 million raising on August 28 in conjunction with announcing its full year results and a major marketing deal with NBC. The stock duly soared from $7.50 to $14 on August 28 and then, after 3 days of trading, the $303 million capital raising was launched on September 2. It originally comprised a $150 million placement although this was up-sized to $200 million and priced at $11. The institutional component of the $153 million PAITREO raised $70.5 million with a 55% take up rate. The shortfall of 4.88m shares cleared at $12.50, raising $61 million and returning a hefty $6 a share or $29.3 million to non-participants. Rights trading ran from September 9 until September 15 with a value of $5.7 million and an average price of $6.48. There was a very healthy 92% take-up of the $82.7 million retail offer as $76 million came through the door. The 1.05 million retail shortfall shares cleared at $10.60, delivering $4.10 in compensation to non-participants so a win for the instos in terms of compensation. A well structured offer. Stock finished the year at $11.87. 7/10.

IOOF (IFL), 2020: a complicated $1.09 billion raising comprising a $432 million placement at $3.50, a 22.5% discount to the dividend-adjusted previous closed, a $588 million 1-for-2.09 non-renounceable entitlement offer and a follow-on $50m SPP, similar to the model adopted by Reece earlier this year. Poorly structured given the lack of renounceability, the excessive size of the placement and the bigger than average discount. The $734 million institutional component (including the placement) completed on September 2 with 92% support for the $282 million institutional component of the entitlement offer. The stock then resumed trading and tanked 21.7% to $3.58 on the first day before further declining. The $306 million entitlement offer was only supported by 3% as just 2.8 million shares were taken up for a total of $9.8 million. The $296 million shortfall went to under-writers and with the stock trading just above $3, they were down close to $50 million at one point. The $50 million SPP was equally poorly supported with just $3.8 million coming through the door. There was no VWAP alternative. Retail owned 52% of IOOF before the deal launched and will be diluted down to below 40% in what has been an appallingly structured deal. Stock finished the year at $3.52 so participants broke even. Retail offers opened on September 7 and closed on September 16 which was too tight a timetable. 3/10.

Emeco Holdings (EHL), 2020: $149 million 1-for-2.1 non-renounceable at 85c, an 18% discount to the previous close of $1.035. There was a 94% take-up of the $111 million institutional component. Retail were banned from applying for additional shares and the $38 million retail offer only attracted $6.5 million in applications so under-writers picked up $31.5m shortfall. Stock finished the year at $1.14 so participants well in front but retail badly diluted. 4/10.

Flexigroup, now called Humm (HUM), 2020: $140 million 1-for-3.2 accelerated non-renounceable entitlement offer at $1.14, a 12.6% discount to the previous close of $1.305. Retail were banned from applying for overs so there was guaranteed dilution. The institutional component raised $79 million with strong participation but the $61 million retail offer was poorly supported only attracting $3 million in applications given the stock was hovering around $1. The retail offer was 50% under-written by Citi so the company said it received $36 million from the retail offer with $33 million of this coming institutional under-writers. Founder Andrew Abercrombie took up 25% of his entitlement and wasn't compensated for the dilution. Stock finished the year at $1.125. 5/10

Coronado (CRN), 2020: A $250 million raising at 60c comprising an over-sized $145 million placement and a 2-for-11 $105 million accelerated non-renounceable which had a 95% participation rate from institutions although a corporate shareholder was diluted without compensation. The $11 million retail offer attracted $9.6 million in applications (including overs which were capped at 2 times entitlement) meaning the $1.4 million shortfall went to under-writers. The stock was at 72c when the retail offer allotted so these were tasty profits for the under-writers left on the table by retail. Stock finished the year at $1.13 so participants almost doubled their money. 4/10

Lynas (LYC), 2020: $425 million raising comprising a $212 million placement at $2.30, a 12% discount to the previous close, followed by a 1-for-7.7 non-renounceable entitlement offer at the same price with applications for additional shares limited to 50% of entitlement. There was no disclosure on the take-up rate in the $100 million institutional component of the entitlement offer. Existing holders were offered pro-rata on the placement and the offer under-written by Cannacord Genuity and Merrill Lynch. The $114 million retail offer attracted $60 million in applications from 7697 holders, which included $10 million in overs. The $54 million shortfall was given away to under-writers with no bookbuild so retail were quite badly diluted by the whole exercise, starting off with a majority stake in the company but only contributing $60 million of the $425 million raising. Stock finished the year at $3.90 so raising was a boomer for participants. 4/10.

Centuria Industrial REIT (CIP), 2020: $240m million accelerated non-renounceable 1-for-3.7 institutional entitlement offer at $3.15 followed by a $101 million retail entitlement with overs limited at 50% of entitlement, which attracted just $35 million. It should have had unlimited overs and there was no breakdown provided on the total figure for overs. Under-written by UBS and JP Morgan. Stock finished the year at $3.09 so narrowly under-water. 5/10

Downer EDI (DOW), 2020: $400 million 1-for-5.58 non-renounceable entitlement offer at $3.75, a 12% discount to the previous close of $4.26. The $339 million institutional component was supported by 97% of holders but shortfall was given away at the offer price. The $61 million retail offer had no overs and unsurprisingly fell 49% short with the $30 million shortfall being handed away to institutional sub-underwriters. Retail investors started off owning just 15.25% of the company and were diluted by the $30 million shortfall because they were banned from applying for additional shares in an in-the-money offer. A month later the stock at $4.23 so this was serious dilution. Stock finished the year at $5.33 so the retail shortfall has been very costly. 2/10

Uniti Group (UWL), 2020: $270 million non-renounceable 1-for-1.68 at $1.40 with no ability for retail shareholders to apply for additional shares and no compensation for non-participants. There was no disclosure about the level of take-up by existing institutions in the $152 million institutional offer, with the shortfall allocated at the offer price rather than through a bookbuild that maximised the price and generated some compensation for non-participants. The $118 million retail offer, which is bigger than usual comprising 43.7% of the overall offer, finished 58% or $69 million short despite never trading below the $1.40 offer price. The shortfall went to sub-underwriters selected by Uniti. Goldman Sachs and Merrill Lynch were the under-writers of a badly structured offer that diluted retail investors. Stock finished the year at $1.71 so solid returns. 3/10.

Super Retail Group (SUL), 2020: $203 million non-renounceable entitlement offer at $7.19, an 8% discount to the previous close of $7.81. Founder Reg Rowe agreed to take up his full $59.2 million entitlement (29.1%) and therefore won't be diluted. The $158 million institutional component (including Reg Rowe) was 95% subscribed with no disclosure on who got the $8 million shortfall. The failure to allow 10,000 retail shareholders to apply for additional shares in the $44 million retail offer, despite a specific written request to do so, has guaranteed a retail shortfall. Macquarie and UBS were the joint managers and under-writers, taking a fee of $2.05%, excluding the Reg Rowe component. The retail offer was well in the money but only attracted a 69% take up ($30.4m) so the unknown under-writers picked up $13.64m worth of shortfall stock which should have either been auctioned off to the highest bidder or offered to other retail investors. Stock finished the year at $10.53 so the retail shortfall proved costly. 3/10

Peninsula Energy (PEN), 2020: announced a $40.3 million pro-rata entitlement offer at a massive 45% discount to the previous close that it described as “renounceable”. Shareholders can sell their entitlements on market between June 9 and June 17, but if they don't sell on market or take up the 9-for-5 offer at 7.1c, the directors will simply sell off the shortfall to whoever they like at the offer price of 7.1c. In other words, take it up or get massively diluted and if you do nothing you get nothing but heavy dilution. True renounceability would see the under-writer conduct a competitive auction of the shortfall and any premium achieved above the 7.1c offer price returned to the non-participating shareholders as compensation. Stock finished the year at 11c so was worth participating to avoid the dilution. 5/10

Aeris Resources (AIS), 2020:
2.02-for-1 non-renounceable entitlement offer at 3c to raise $40 million. Under-written by Euroz and Bell Potter. Retail offer was only 26% subscribed with $2.6 million coming in, including less than $200,000 in the "overs" offer. The shortfall offer attracted about $6 million in bids at the 3c offer price with $93m shares or $2.8 million worth of stock finishing up with the under-writers. See outcome announcement. Stock never closed below 3c after the offer closed so no damage for either participants or the under-writer. Stock finished the year at 10c under-writers made a fortune. 6/10.

Decmil (DCG), 2020: $52 million raising structured as a non-renounceable 4.2-for-1 at 5c. The previous trade before a month long suspension was at 20c so existing shareholders will take a huge haircut if they don't take up their entitlement. See power point presentation. The $20.3 million retail component finished 65% subscribed and shareholders were able to subscribe for unlimited additional shares although there was no disclosure of the breakdown in the outcome announcement. Stock finished the year at 63c after a 1-for-5 consolidation which is the equivalent of 12.6c so backers of the capital raising at 5c did very well. 6/10 thanks to unlimited overs.

Panoramic Resources (PAN), 2020: $90 million raising at the heavily discounted price of 7c comprising a $29 million placement and a $61m 1.15-for-1 non-renounceable entitlement offer at 7c with retail shareholders limited to "overs" of 50% of entitlement. Western Areas is entering as a 19.9% shareholder via the placement and a priority entitlement to the retail shortfall. Last trade was 12c so this 41% discount is a terrible deal for retail investors who get heavily diluted, particularly those who don't participate. The institutional component raised $52m including $23.2m for the accelerated offer with the large $38m retail entitlement offer, which included overs, finishing 66% subscribed, leaving a big shortfall for Western Areas. Stock finished the year at 13c so big participants such as Western Areas nearly doubled their money. 3/10

Nickel Mines (NIC), 2020: A $231 million non-renounceable 1-for-3.6 entitlement offer at 50c to fund Indonesia expansion. Priced at an 11.5% discount to the previous close of 56.5c and retail shareholders can apply for unlimited additional shares. The $179m institutional component was 75% subscribed by existing holders, which is lower than average, meaning new holders picked up at the shortfall at 50c with no compensation paid to non-participants. The $53 million retail offer attracted $32 million in entitlement applications, $7 million in applications for additional shares and under-writers picked up the remaining $14 million shortfall. The offer was in-the-money for the duration but still fell short with no compensation for non-participants. No data was provided on participation rates by shareholder. Stock finished the year at $1.10 so an absolute boomer for the under-writers who picked up shortfall stock. 6/10

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 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. Stock finished the year at $2.63 so offer was massively under-priced. 2/10.

May 21, Qube (QUB): a $500 million 1-for-6.35 non-renounceable entitlement offer at $1.95 with retail investors invited to apply for additional shares equivalent to 100% of entitlement. Canada's CPP declined to participate in the $264 million accelerated institutional offer but there was 99.3% demand for the balance and "overwhelming demand" for the shortfall. No disclosure as to how the shortfall and CPP's entitlement was allocated in this ASX announcement. The $236 million retail offer to the 27,000 holders closes on May 21 and is allotted on May 28. The average retail offer will be for $8740 worth of new shares with applicants able to apply for double this under the "overs" component which will hopefully ensure it doesn't short. The stock soared to $2.56 after the suspension was lifted so being 31% in the money, let's hope the board runs a strong marketing campaign to maximise participation. Wrote to the company on May 5 and received a considered reply from the CFO pointing out that there hadn't been a shortfall in two previous entitlement offers which had an overs limit of 100% of entitlement. He was right. The entitlement take-up was a staggering 83% and this soared to 138% with the overs, leading to a scale back based on size of holding. See announcement. Stock finished the year at $2.94 which was a solid performance and kind of academic given high participation and pro-rata structure spread the gains evenly. 7/10

May 20, Monash IVF (MVF): Unveiled an emergency $80m capital raising at 52c, a hefty 26.8% discount to the previous trade of 71c. Comprised a $39.8m placement and a $40.2m 1-for-3 entitlement offer with retail able to apply for overs of 100% of entitlement. Closed May 20. Good disclosure in the outcome announcement which showed a 43% take up of the $15 million retail offer comprising $5.3 million in entitlements and $1.2 million in overs which would have been higher if not limited to 100% of entitlement. Stock finished the year at 78c so solid returns for participants. 5/10

May 1, Flight Centre (FLT): The $700 million Flight Centre capital raising included a $282 million placement at $7.20 which diluted retail shareholders and a $418 million 1-for-1.72 non-renounceable entitlement offer at the same price, which was a 27.3% discount to the last traded price of $9.91. The three founders – CEO Graham Turner, Geoff Harris and Bill James – went into this crisis owning a combined 42% of the company and collectively committed $25 million of their $175 million entitlement, diluting themselves into the raising. The total number of shares on issue almost doubled. There is also an ability for retail investors to apply for overs equivalent to 25% of their entitlement, which is way too restrictive from a small shareholder perspective. The founders went in through the institutional offer which was 96% subscribed by eligible instos. They should have gone in through the retail offer and also tucked into the 25% "overs". The $138 million retail offer finished 23% short, attractive $106 million from 13,116 applicants (there were about 22,000 shareholders listed in last year's annual report), including $14 million through the needlessly constrained overs facility which was capped at just 25% of entitlement. The under-writers Macquarie and UBS were on a winner with the stock trading around $10, well clear of the $7.20 offer price. Stock finished the year at $15.85 so investors more than doubled their money. 4/10

May 1,
G8 Education (GEM) On the day last trading day before Easter, G8 Education came up with a $301 million capital raising comprising a $134 million placement and a $167 million 1-for-2.2 entitlement offer which comprised $89 million from institutions and $79 million for retail. So, this was a retail heavy register that started with retail owning 47.3% of the company and will finish with 30-something depending on the size of the retail shortfall. The placement was a tolerable 44.5% of the raising which wasn't as bad as Oil Search but still on the high side. As usual, there was no renounceability and the discount was a hefty 26% with the offer at 80c against a last trade of $1.08. The institutional component of the retail offer was 99.7% subscribed. The retail overs were limited to just 25% of the entitlement and with the stock trading around the 80c issue price, it finished $50 million short, attracting just $25 million from 4198 applicants. There were about 22,000 shareholders listed in the last annual report. At least the retail offer was barely in the money, meaning that the placement wasn't given away too cheaply. The under-writers RBC and UBS were left with a chunk of stock which would have been farmed out to sub-under-writers when the deal was first launched. Stock finished the year at $1.18 so investors are well in front. 4/10

April 27, Oil Search (OSH): One of the key measures for fairness in capital raisings is the size of the placement compared with the size of the entitlement offer. Ideally, there would be no placement at all, but if there has to be one, it should comprise no more than one third of the offer. Oil Search has been one of the worst offenders on this front when it launched a $760 million placement which was almost double the size of the 1-for-8 entitlement that raised an additional $400 million. A 1-for-8 is nothing. It clearly should have been the other way around with the a placement of no more than $400 million and an entitlement offer raising double that amount. It is just appalling that in a $1.16 billion offer, retail investors are being offered only 6.9% of the raising ($80 million out of $1.16 billion) when we started out owning 20% of the company. The placement of 362 million new shares at a 23% discount of $2.10 also represented 23.74% of the pre-issue capital so it would have been illegal earlier this year. All up, this is shocker, with the only minor saving grace being that retail shareholders are being offered "overs" which are capped at 200% of their entitlement. The company agreed to a request to publish this progress announcement to the ASX revealing that the offer was 20% subscribed with a week to go. The institutional component of the $320 million entitlement offer was 95% subscribed excluding largest shareholder Mubudala (Abu Dhabi sovereign fund) which didn't participate. Despite being heavily in the money, the retail offer fell $0.5 million short with applications for entitlements totalling $39.4 million and "overs" coming in at $40.1 million. This is a clear lesson about the need for unlimited "overs" when an offer is non-renounceable. See announcement. Stock finished the year at $3.71 so participants are well in front. 3/10

April 27, Southern Cross Media (SXL): $169m raising at 9c comprising a $47 million placement and a $121 million entitlement offer. The placement comprised a ridiculous 68% of the pre-raising shares (522 million shares at 9c against 768.7m before the raising was launched). Stock had doubled to 18c by April 15 so massive dilution for retail shareholders. Non participants receive no compensation. Institutions took up 92% of their entitlements to the $102 million entitlement offer leaving an $8.16 million shortfall with the unknown sub-under-writers. The $20 million retail offer will no doubt finish well short given the lack of overs. Have asked them to crank up a solid marketing campaign and was delighted when they released this announcement to the ASX revealing the offer had been 18.6% subscribed with a week to go. The final announcementrevealed 66% of the shares were taken up but gave nothing on the numbers who participated. The $6.8 million shortfall went to the under-writers and with the 9c shares trading at 12-13, it was money for jam for them. Stock finished the year at $2.24 after a 10-for-1 consolidation so investors more than doubled their money. 2/10 given huge discount and lack of any overs.

April 24, Reece (REH): The plumbing supplies giant has shown how to do it, becoming the first issuer to ever follow an institutional placement with an entitlement offer that was also twinned with an SPP for retail. The detail is all spelt out here but this is very bold for a capital raising because it sets the precedent which says: “any company which does an institutional placement should also do an SPP on the same terms, regardless of whether there is an entitlement offer thrown into the mix as well.” Normally, after a placement, retail will get a token SPP or there will be an entitlement offer if the situation is more pressing, just like occurred so many times during the GFC. But we never get both. Asciano is the only issuer I can think of that did a make-good SPP after a placement/entitlement combo but it wasn't at the time same. Here is the 2009 SPP outcome announcement explaining how the Asciano offer was scaled back from $290 million to $100 million but retail shareholders had still successfully topped up after the earlier dilutive placement and entitlement offer. Tellingly, then Asciano chairman Tim Poole is now deputy chair of Reece. The $600 million Reece package involved a $368 million placement at the fixed price of $7.60, which was a 12.5% discount to the last closing price of $8.69. There was also a 3-for-55 non-renounceable entitlement offer at the same price to raise $232 million and the $42 million institutional component was more than 99% subscribed. The three Wilson brothers are collectively in for their full $170 million slice of that, coming in through the $190 million retail offer. The Wilson's will be scaled back from 73% to 67% by the placement and a little further by the SPP. The 4894 eligible Reece retail shareholders had a theoretical maximum take-up of $147 million in the SPP which wasn't capped. In the end, 1991 of them applied for $47 million worth of SPP shares with an average application of $23,600 and a healthy take up rate of 40.6%. The $20 million retail entitlement offer (ex Wilsons) also had unlimited overs and the scale back formula saw all applicants receive a minimum of $15,000 worth of share, although it was not disclosed how many shareholders participated in the entitlement offer, which finished 64% subscribed as $12.8 million came through the door, along with an extra $10 million in applications for additional shares. See outcome announcement. Stock finished the year at $14.80 so investors more than doubled their money. 7/10

April 21, Webjet (WEB): raised $346 million broken down into 3 components, $115 million in a placement at $1.70, $116 million from the accelerated institutional entitlement offer at $1.70 and $115m from the 1-for-1 non-renounceable retail offer. Foreign private equity firm Bain took $25m through the placement. Non-participants in the retail offer got nothing but participants could apply for overs equivalent to 100% of their entitlement. The institutional component was 90% subscribed leaving an $11.6 million shortfall which went to unknown parties at no premium. The discounted pricing was the most offensive element because the stock last traded at $3.76 before it was suspended and when it resumed trading it finished the week on April 3 at $2.73, a massive 60% premium to the $1.70 placement price. It used the supersized waiver alongside the new emergency relief to arrive at the placement component of the raising representing 50% (after upsizing the placement and underwritten entitlement offer following strong demand) of shares on issue when the raising was announced. The retail offer closed on April 21 and Webjet attracted strong support with applications worth $86m, plus a further $46.7 million in overs. This led to a $14.5m scale back where investors were cut from 100% overs to 69%. The outcome announcement also included excellent data on participation rates. Unlike with Kathmandu, this strongly in-the-money offer was well supported but there was still 11,427 shareholders who declined an offer to buy new shares at $1.70 when the stock was trading well north of $2. Stock finished the year at $5.07 so investors almost tripled their money. 4/10

April 17, Kathmandu (KMD): Sometimes existing shareholders just don't have the capacity to participate in a rushed capital raising during a crisis and that can see them massively diluted. That's exactly what happened to New Zealand entrepreneur Rod Duke whose Briscoe business used to be the largest shareholder in retailer Kathmandu with a 16.3% stake. However, with the broader retail sector in crisis, he couldn't afford to participate and was subsequently diluted down to just 6.77% without any compensation. Kathmandu is suffering indigestion after paying $350 million in cash for Rip Curl in November last year and has now embarked on an emergency $NZ207 million capital raising comprising a $NZ30 million placement and a $NZ177m 1.2-for-1 entitlement offer at NZ50c. However, because the offer wasn't renounceable, when Briscoe rejected the offer, its shares were just given away to new investors at NZ50c. Leaving aside the Briscoe shares, institutions took up 96% of their entitlements. The $NZ53 million retail component offered unlimited "overs" but only attracted $NZ26.5m in applications along with $NZ17 million in overs to finish 18% short as investors declined to take up $NZ9.5 million worth of stock which was comfortably in the money. This was another windfall for the under-writers with the stock at around A70c shortly after the retail shares were allotted on April 22. No disclosure on how many shareholders participated. Stock finished the year at $1.19 so investors more than doubled their money. 5/10.

April 16, Oohmedia (OML): One of the oldest tricks in the book is for big corporate, institutional or insider shareholders to creep up a share register by under-writing the retail component of a non-renounceable entitlement offer. That is what we've got with the emergency $167 million raising from debt-laden outdoor advertising company oOH!media, which comprised a $39 million placement at 53c, plus a 1-for-1 entitlement offer for existing shareholders at the same price with no overs. The stock had last traded at 84c before the offer was launched. The ability to apply for extra shares was presumably banned because major shareholder HMI, a US-based investment fund, had aspirations to lift its stake from 18% to 25% and intended to average down its entry price through both the placement and the retail shortfall. Boards should never prioritise under-writers over retail shareholders when it comes to dealing with the retail shortfall. This company made used of the supersized waiver to allow it to make a placement of 30% on the basis that it was also conducted a one-for-one entitlement offer. The accelerated component of the institutional entitlement offer was supported by 91% of institutional shares and raised $117 million. The shortfall was allocated to unknown parties at no premium. The retail component was only worth $14 million and was not renounceable with no overs. All 3400 retail shareholders should have taken up their entitlement but it finished 27% short with $4 million worth of stock going to the under-writers. No disclosure of how many shareholders participated. Stock finished the year at $1.66 so investors doubled their money. 2/10.