Positive response to equity raisings as groups line up for more

Picture: Janine Eastgate

Institutional investors are bracing for more equity raisings in the days ahead.

Large investment banks with bases in Australia are said to have at least five deals in the pipeline and more on the way.

Picking the candidates right now is some a guessing game, given that many groups need to boost their balance sheet.

But a positive for the groups in search of funds is that most listed businesses that have raised money during the coronavirus crisis have seen their shares perform reasonably once they resumed trading.

Advertising company oOh! media raised equity at 53c per share and the stock on Thursday closed at 64c per share.

Cochlear last traded at $190 per share after raising equity at $140 per share.

Webjet asked investors to buy stock at $1.70 per share and the stock on Thursday closed at $2.78.

In fact, Webjet upsized its raising on Thursday on the back of strong investor demand once the deal was repriced, with the online travel agency securing $346m instead of $332m.

Private equity firm Bain Capital participated in the institutional offer and sub-underwrote the retail component.

Possible candidates in the days ahead include Tabcorp, Mayne Pharma and retailers such as Lovisa, while Southern Cross will raise equity if it can lock in demand.

Most think that if Flight Centre successfully raises equity, as expected, Corporate Travel will tap the market.

Other candidates are Crown Resorts and The Star Entertainment Group.

Homeware and home decor company Adairs is not thought to be moving to raise funds, but market analysts say it will be inevitable for other retailers.

Groups such as Myer and Noni B owner Mosaic Brands may find raising funds through the market challenging and for them it may not be an option.

Some investors have missed the rally, with shares coming back 15 per cent after falling dramatically. For them, participating in the raisings is an opportunity to secure cheap stock, and demand from those investors is strong, according to one analyst.