Reece sucessfully completes $600m raising

Plumbing giant Reece has successfully tapped investors for $600m to capitalise on the need for better sanitation amid the global coronavirus pandemic.

Reece sees opportunities in the greater focus on sanitation as a result of the coronavirus pandemic.

Plumbing giant Reece has successfully tapped the market to raise $600m to bolster its balance sheet so it can capitalise on the need for greater sanitation amid the global coronavirus pandemic.

The company, which has retail stores across Australia, New Zealand and for the past two years, the US, announced on Tuesday it had completed the institutional offer of the capital raising, which chief executive Peter Wilson said was a strong endorsement of the company’s strategy.

Reece’s pitch comprised the slogan “doctors cure, plumbers prevent” and Mr Wilson said the company aimed to fortify itself so it can take advantage of the opportunities arising during the COVID-19 crisis and in the virus’ aftermath.

Reece conducted a fully underwritten institutional placement and three-for-55 entitlement offer, which together raised about $600m. The entitlement offer secured more than 99 per cent take up from eligible shareholders, raising $42m at an offer price of $7.60.

Mr Wilson said the placement attracted significant demand from new and existing institutional shareholders and more than 48.3 million new shares will be issued.

“We are extremely pleased with the strong support for the equity raising from existing institutional shareholders and new investors,” Mr Wilson said.

“We see the success of the equity raising as a clear endorsement of the long-term strategy of Reece. This capital raising will fortify the balance sheet and position Reece strongly for the future.”

The new shares are expected to be issued on April 17. The company is also planning to raise $190m from a fully underwritten three-for-55 retail entitlement offer, which will open at 9am on April 15 and close at 5pm on April 24.

The Wilson family that controls Reece, which has a network of retail stores across Australia, New Zealand and two years ago moved into the US, will take up its allotted $170m worth of new shares to see its stake in the 100-year-old business fall to 67.7 per cent, from 73.3 per cent.

During an investor presentation to sell the raising, Mr Wilson said trading in the US for March had been up on last year with sales of its water heaters, plumbing services and other essential repairs products selling well.

He said Reece would be strategic and prudent when it came to forging new deals when the pandemic ended, which could include growing its US business organically and via acquisitions.