ASX Capital Raisings: Past, Present and Future
What should investors know about capital raisings on the Australian Securities Exchange? This series highlights past,...
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Explore StocksAustralia’s tech sector saw a number of new companies go public in 2020, with many others taking steps to raise cash so that they could continue operating during the tough economic conditions brought on by the coronavirus pandemic.
In a record year for capital raising activity in Australia, the high-technology sector in the country moved ahead, with many of the companies listed last year seeing their share prices increase significantly.
Here the Investing News Network lists the top ASX capital raisings done in a single transaction by tech companies in 2020, using data from Refinitiv.
Total raised: US$706.675 million
Nuix’s mission is to create innovative software that empowers organisations to simply and quickly “find the truth” from any data in a digital world. Established in 2000, Nuix helps customers process, normalise, index, enrich and analyse data from different sources, solving many of their complex data challenges.
After closing one of the biggest initial public offerings (IPOs) in the country in 2020, Nuix listed on the ASX in December, raising AU$975 million in an offer backed by top shareholder Macquarie.
The forensic software company, which currently has a market cap of AU$3.14 billion, reported a revenue increase of 26 percent year-on-year in 2020. Nuix has also been a top performer since its IPO.
Total raised: US$144.124 million
Founded in 2006 in New Zealand, Xero is a cloud-based accounting software company that connects people with the right numbers anytime, anywhere and on any device.
In its latest half-year report, Xero acknowledged the tough environment for acquiring new customers due to COVID-19. That said, its subscribers grew by 19 percent to reach 2.45 million, with Australia becoming the first market to surpass 1 million subscribers. The company also made news headlines at the end of last year, when it acquired invoice lending platform Waddle.
Total raised: US$85.971 million
Pushpay provides a donor management system — including donor tools, finance tools, a custom community app and a church management system — to the faith sector, non-profit organisations and education providers located predominantly in the US and other jurisdictions.
In its interim report for 2021, Pushpay reported a 38 percent increase in customers, which rose from 7,905 to 10,896, as well as a 53 percent increase in operating revenue, which according to the company jumped from US$56 million to US$85.6 million.
In September 2020, the company announced its largest product launch to date. It included 16 new products, features and enhancements to the Pushpay and Church Community Builder solutions. The launch unveiled the new product name of the company’s all-in-one engagement solution, ChurchStaq.
Total raised: US$79.097 million
Citadel Group was an enterprise software and services company that specialised in improving patient healthcare outcomes and securely managing system critical data. It supported enterprise clients to deliver critical IT projects and services enabling anytime, anywhere communication and collaboration.
In December 2020, Citadel was acquired by Pacific Equity Partners and delisted from the ASX.
Total raised: US$74.48 million
Doctor Care Anywhere was founded in July 2013 as a telehealth company based in London. It is committed to delivering high-quality, effective and efficient care to its patients through the integration of primary and secondary care.
The UK-headquartered company listed on the ASX last year following an IPO that raised AU$102 million. In its latest quarterly report, Doctor Care Anywhere reported unaudited revenue for the 2020 financial year of 11.6 million pounds — a 102.1 percent increase compared to the prior year. During the reporting period, consultations increased to 214,700, up 305.5 percent year-on-year.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
In a record year for capital raising activity in Australia, many high-tech companies were successful in their efforts to increase cash. Here’s a look at the top ASX capital raisings done in a single transaction by tech companies in 2020.
Australia saw a record year in equity raising activity in 2020 as companies across the board looked for ways to mitigate the impact of COVID-19.
Government lockdown measures took a toll on project development, but several companies listed on the Australian Securities Exchange (ASX) were able to raise capital to weather the pandemic storm.
Here the Investing News Network lists the top ASX resource capital raisings done in a single transaction in 2020, using Refinitiv data for the metals and mining sector.
Total raised in 2020: US$772.4 million
One of the world’s top gold producers, Newcrest Mining has operating mines located in Australia, Canada and Papua New Guinea. In 2020, the company produced 2.2 million ounces of gold at an all-in sustaining cost of US$862 per ounce and generated an underlying profit of US$750 million.
On April 30, 2020, Newcrest announced it was undertaking a AU$1 billion fully underwritten institutional placement, and a share purchase plan targeting up to AU$100 million. With the cash raised, the company intended to purchase the Fruta del Norte financing facilities and to fund future growth options, such as the construction of declines at Havieron and Red Chris.
The company went on to purchase the Fruta del Norte financing facilities for US$460 million, and both Havieron and Red Chris received funding and regulatory approvals earlier this year for AU$146 million and C$135 million, respectively.
Total raised in 2020: US$577.271 million
IGO owns the Nova nickel-copper-cobalt operation and holds a 30 percent interest in the Tropicana gold mine joint venture. At the end of last year, the company inked a AU$1.9 billion deal with top lithium producer Tianqi Lithium (SZSE:002466) that will provide IGO with a 24.99 percent indirect interest in the Greenbushes lithium mine and a 49 percent indirect interest in the Kwinana lithium hydroxide plant.
To fund the deal, IGO proposed to use a combination of AU$1,100 million in new debt facilities, an equity raising of up to AU$766 million and existing cash reserves of between AU$85 million and AU$149 million. The funding was successfully completed, and Tianqi shareholders also gave approval earlier in 2021.
Total raised in 2020: US$306.975 million
The second largest producer of rare earths, and the only one outside of China, Lynas operates the Mount Weld rare earths deposit in Western Australia. The company’s 2020 production was hit by COVID-19, as it closed its Malaysian plant for six weeks following guidelines from the government.
In Australia, Lynas plans to process low-level radioactive material from its Mount Weld mine at a new cracking and leaching plant in Kalgoorlie in Western Australia. That will allow the company to move part of its operations off its Malaysian plant. To fund the construction and its Lynas 2025 plans, the company was able to successfully raise AU$425 million.
Total raised in 2020: US$306.975 million
Nickel-focused producer Nickel Mines holds an 80 percent interest in the Hengjaya and Ranger projects, both of which operate two line rotary kiln electric furnace plants producing nickel pig iron (NPI) within the Indonesia Morowali industrial park.
In the December quarter, Hengjaya produced 5,718.9 tonnes of nickel metal at an average NPI grade of 14.9 percent, while Ranger produced 5,808.1 tonnes of nickel metal at an average NPI grade of 15 percent. The company also launched and successfully completed a AU$364 million equity raising that month to fund the acquisition of its initial 30 percent interest in the Indonesia-based Angel nickel project.
Total raised in 2020: US$180.1 million
One of the world’s largest producers of high-quality metallurgical coal, Coronado Global owns a portfolio of mines and development projects in Queensland, Australia, and in Virginia and West Virginia in the US.
In August, the company launched a AU$250 million fully underwritten equity raising to improve its financial flexibility due to the impact of the COVID-19 pandemic.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
The Investing News Network lists the top ASX resource capital raisings done in a single transaction in 2020.
The impact of COVID-19 led to increased capital raising activity in Australia in 2020, as companies raced for cash in order to survive the uncertainty and economic toll of the pandemic.
In fact, 2020 was a historic year for equity capital raisings in the country, with the highest total activity seen in the country since 2015 and a record number of equity issuances, according to Refinitiv.
The temporary collapse in share prices and increase in market volatility at the start of the COVID-19 period resulted in a much larger than normal number of companies raising capital to ensure they were well capitalised to navigate such uncertainty, said Timothy Toner.
“The most successful companies generally raised capital opportunistically for growth-related purposes,” added Toner, who is managing director and founder at Vesparum Capital.
Companies from all sectors and industries, from the resource space to the tech arena, were successful in their efforts to increase capital to weather the COVID-19 storm.
This year is also looking bright for companies across the technology, healthcare, financial and resource markets, all of which will likely continue to benefit from investor demand.
Click through the articles listed to better understand what every investor should know about capital raisings in Australia, recent initial public offerings and what might be ahead for 2021.
What should investors know about capital raisings on the Australian Securities Exchange? This series highlights past,...
Read on to learn how companies listed on the Australian Securities Exchange can raise cash, from...
2020 saw ASX-listed companies raise AU$66 billion, the largest amount of capital in the last decade.
The Investing News Network lists the top ASX resource capital raisings done in a single transaction...
In a record year for capital raising activity in Australia, many high-tech companies were successful in...
IPOs on the ASX raised more than AU$5 billion last year. Which newly listed resource companies...
The Investing News Network looks at the top-performing ASX-listed tech companies with initial public offerings in...
After a record year of capital raising activity, what's ahead in 2021? INN asked experts and...
What ASX resource IPOs should investors know about this year? Here's a look at the companies...
Interest in digital platforms spiked in 2020 on the back of the coronavirus pandemic, with 113...
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
What should investors know about capital raisings on the Australian Securities Exchange? This series highlights past, present and future trends to be aware of.
The wave of initial public offerings that swept Australia’s tech industry in late 2020 is expected to continue well into 2021. The Australian Financial Review reported that a number of Australian tech companies are on the path towards a "likely listing" for 2021.
Our FREE outlook report on the Australian tech market is new for 2021! This INNvestor Report is sure to offer you beneficial and informative data on this exciting market so you’re ready to invest.
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There are different reasons why a company might be looking to increase its capital, from acquiring new assets to keeping a healthy balance sheet and everything in between.
It’s important for both new and seasoned investors to be familiar with the different options that companies have to raise money and how different methods can impact a company’s share price.
In uncertain times, companies from all sectors and exchanges face challenges in developing their assets, but how can companies listed on the Australian Securities Exchange (ASX) raise cash? The Investing News Network reached out to experts to answer your questions about capital raising on the ASX.
Placements are the most common way for companies to raise capital, but there are plenty of other alternatives. In fact, on the ASX there are quite a few different avenues a company can take to raise capital and push forward with its plans. Here’s a brief overview of the main options a company has:
In 2020, the ASX introduced temporary measures to facilitate emergency capital raisings to help companies weather the COVID-19 storm. The move increased the placement capacity for listed companies from 15 percent to 25 percent of their share capital, as long as they met other requirements.
As 2021 kicks off, and with uncertainty still on the horizon, many companies will continue to look for ways to increase their capital. But what should investors consider when companies are racing for cash?
Antony Rumboll of Baker Mckenzie said Australian investors are receptive to companies raising equity capital and do not necessarily immediately see it as a negative.
“ASX companies raising capital for growth initiatives are generally supported if the market supports that initiative,” the Baker Mckenzie partner in Sydney said. “Equally, equity raisings to shore up balance sheets are generally supported, but will require a greater discount.”
Speaking about the impact of a capital raising on a company’s share price, Timothy Toner, managing director and founder at Vesparum Capital, said this is typically driven by the underlying rationale of the transaction and the deal parameters.
“Investors should be concerned if the capital raising is completed for sub-optimal reasons at an excessively high discount to the prevailing share price,” he added.
For Toner, capital raisings can be enormously dilutive to existing shareholders, so a compelling use of funds is critical to see from companies. “Lower discounts and fairer offer structures like entitlement offers are also positive for shareholders,” he said.
Commenting on the impact of raising cash, Rumboll said rights issues are generally priced at a discount to the theoretical ex-rights price and so can cause a share price drop once the rights issue is complete.
“That said, if the capital raising accompanies an accretive transaction, the price can quickly appreciate above the offer price,” Rumboll said. “Where a raising is designed to shore up balance sheets, the discount is often higher, potentially quite significant. So investors closely scrutinise the offer price and applicable discount as well as the use of proceeds.”
The debate as to whether the way ASX companies raise capital favours institutional investors over retail investors has been ongoing for several years.
“Investors generally can benefit significantly from participating in discounted capital raisings,” Toner said. “However, institutional investors definitely receive the lion’s share of allocations, and therefore returns, as compared to retail investors. Clearly it’s not a level playing field.”
For his part, Rumboll said the boards of listed companies are sensitive to ensuring that capital raisings are equitable.
As such, he explained, rights issues, which can include or exclude a renounceable “right,” are a popular means for companies to raise capital to ensure that equitable approach. Or, where an institutional placing is employed, retail investors are usually provided an opportunity through a “share purchase plan” to maintain their investment in the company.
“During 2020, there was a significant emphasis on allocations of capital raisings, with an expectation from the market, and regulators, that existing investors would be given a pro rata allocation ahead of new investors,” Rumboll added.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Read on to learn how companies listed on the Australian Securities Exchange can raise cash, from private placements to rights issues.
Last year was undoubtedly challenging for companies in all sectors, with an increased number of ASX-listed companies racing for cash to survive global uncertainty.
The Australian government implemented unprecedented monetary and stimulus measures to battle the impact of COVID-19, ultimately making 2020 a historic year for capital raising on the ASX.
At over US$37 billion last year, equity capital market activity hit a record not seen since 2015.
Speaking with the Investing News Network (INN) about capital raising trends seen in Australia, Elaine Tan of Refinitiv said 2020 was a strong year for equity listings in the country across multiple sectors.
According to the firm’s data, the financials sector accounted for the majority of the equity capital raisings in Australia, capturing 20.4 percent of the market at US$7.6 billion, up 30.5 percent from a year ago.
Materials followed behind with a market share of 17.3 percent for a total of US$6.4 billion, an 87.8 percent increase from 2019 and the highest annual total since US$7.3 billion in 2011.
“The sector also saw the greatest number of equity capital market offerings as it reached the busiest-ever annual period in 2020, driven by activity from metals and mining (US$5.7 billion),” Tan said.
Given that 2020 was such an active year, Antony Rumboll of Baker Mckenzie expects 2021 to be a little more subdued, assuming conditions generally improve as the COVID-19 pandemic subsides.
“That said, there is always a level of demand for new capital raisings,” he told INN. “With increasing commodity prices, we believe resources will be well supported if they need to raise capital.”
In 2021, companies across the technology, healthcare, financials and resources industries will likely continue to benefit from investor demand.
Looking at what could happen this year, Timothy Toner, managing director and founder at Vesparum Capital, told INN that the current market environment is certainly conducive to capital raisings.
“We expect companies in the resources sector to try to leverage the positive market sentiment to fund future development and exploration activities, particularly given the recent commodities boom,” he said.
For Tan, senior analyst on Refinitiv’s deals intelligence team, 2021 will most likely focus on recovery.
“While uncertainties remain, the momentum in equity capital market activity seen in 2020 is expected to continue as the impact of stimulus on the equity markets continues to provide liquidity and the imminent rollout of vaccines supports a decent rebound in economic growth,” she said.
Moreover, equity capital market activity in these sectors is seeing upticks already at the start of this year.
Total equity capital market proceeds raised so far in 2021 for the financials sector are up 258.9 percent compared to the same period in 2020, while materials proceeds are up 90 percent and high-technology proceeds are up 216.3 percent. Healthcare has grown 37.5 percent by number of equity issues, but has declined in proceeds by 51.8 percent year-on-year.
In 2020, companies not only looked to secure cash to protect their balance sheets and improve liquidity — some also decided to make the jump and go public. Initial public offering (IPO) activity on the ASX last year was robust, with a total of 113 companies listed, up by 23 year-on-year.
According to Refinitiv data, IPO listings in Australia from the high-technology sector had a market share of 16.8 percent, raising US$610.9 million, an increase of 12.2 percent from 2019. That was the highest annual total since 2015, when proceeds reached US$948.4 million.
“Nuix’s (ASX:NXL) US$353.3 million IPO was the second largest IPO in Australia for 2020,” Tan explained to INN. “As technology continues to be a disruptive enablement of change, it will continue to be an enduring trend into 2021.”
Companies that kicked off their public listings last year have seen their share price increase significantly, both in the tech space and the resource sector.
“IPO activity was very strong in the back half of 2020, and there are a significant number of potential IPOs in the pipeline for 2021,” Toner said. “We are seeing a number of high-growth private tech companies accelerating their IPO plans as a result of strong performance during the COVID-19 period.”
This year, the ASX expects the three popular sectors of technology, healthcare and resources to focus strongly on IPOs, Rumboll explained.
“The ASX is also placing a focus on international diversification of the (exchange), seeking more international companies (especially those from the US) to choose ASX as their listing venue,” Rumboll said. “Assuming the current conditions continue, we expect 2021 to be another strong year for IPOs.”
Speaking about the challenges for companies seeking a public listing, Rumboll pointed to the sheer number of IPOs coming to market, as well as market fundamentals and sentiment.
“The Australian IPO market can close very quickly, and so one bad experience for investors can quickly close the market,” he said.
Toner also pointed to the high number of companies looking to debut on the exchange as a challenge.
“Interest from institutional investors is probably the key impediment given most funds we work with are inundated with pre-IPO and IPO opportunities and (are) growing increasingly nervous about valuations.”
But can retail investors benefit from the upcoming listings on the ASX?
“Generally, retail investors must receive an allocation from their brokers, and so investors should look to their brokers in order to benefit from IPOs,” Rumboll said. “As with all investments, investors need to consider the prospectus closely to consider each IPO on its merits and take professional advice.”
For Toner, the odds are stacked firmly in favour of institutional investors in terms of access to IPOs.
“However there are still some compelling IPO opportunities for retail investors,” Toner said. “Due diligence is critical given the significant variability in deal quality.”
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
After a record year of capital raising activity, what’s ahead in 2021? INN asked experts and analysts to share their thoughts.
The world took an unexpected turn in 2020 as COVID-19 broke out and spread around the four corners of the globe early in the year.
As the year unfolded, companies from all countries and sectors had to take resolute steps to ensure they would be able to survive the impact of the pandemic.
In Australia, many looked for ways to increase liquidity and ensure healthy balance sheets by raising capital, leading to the highest level of activity seen in the past 10 years.
Here, the Investing News Network (INN) looks back at the main 2020 trends in equity capital market activity from companies listed on the Australian Securities Exchange (ASX).
Reaching a total of AU$66 billion, 2020 saw ASX-listed companies raise the largest amount of capital in the last decade. Furthermore, in terms of the number of transactions, more companies raised capital on the ASX in 2020 than on any other global exchange, according to Baker Mckenzie.
Speaking with INN, Antony Rumboll, partner at the firm, said last year ASX companies raised cash for different reasons. “Some to shore up balance sheets in the face of the COVID-19 pandemic and the economic disruption it has caused,” he said. “Others were able to raise cash to accelerate growth initiatives or as a ‘war chest’ for future opportunities.”
According to Refinitiv, 2020 was undoubtedly a historic year for equity capital raisings in Australia, with the highest total activity seen in the country since 2015 and a record high number of equity issuances.
“Equity capital market activity in Australia was dampened during the first quarter of 2020 as the nation battled bushfires and then COVID-19 hit the markets,” Refinitiv’s Elaine Tan explained to INN.
“However, with unprecedented monetary and stimulus injections and a favourable interest environment, activity rebounded (in the second quarter) as companies shored up cash to protect their balance sheets and improve liquidity,” added Tan, who is senior analyst at the market data firm.
On the initial public offering (IPO) front, in line with global trends, IPO activity in Australia witnessed a slow start in 2020 as the coronavirus began to make its mark, but eventually rebounded, bolstered by economies emerging from lockdown and by extensive market liquidity.
“IPO activity ended the year with a strong finish, as total proceeds during the second half of 2020 reached US$3.6 billion from 73 listings in Australia, a significant increase compared to only US$65.7 million raised in the first half of 2020 from 10 IPOs,” Tan said.
Meanwhile, follow-on offerings in Australia hit a five year high in 2020 and totaled US$33.4 billion, up 52.4 percent from a year ago.
“The COVID-19 crisis made a lot of companies reassess their business models and reconfigure their operations. One of the areas that has seen massive growth and acceleration is digitization,” Tan commented to INN. “Technology companies, as well as those that utilized artificial intelligence-driven solutions across various sectors, have attracted rising investor appetite that could encourage a positive outlook for those in the pipeline.”
The senior analyst at Refinitiv added that issuers from Australia and New Zealand were not the only ones tapping the Australian market. Foreign issuers listing their IPOs in Australia were from the UK, the US, Ireland, Israel and Singapore.
Companies that debuted on the ASX last year have been faring quite well, with resource and tech companies seeing their share prices increase significantly since going public.
Commenting on trends seen in equity capital raising in 2020, Timothy Toner, managing director and founder at Vesparum Capital, said the temporary collapse in share prices and increase in market volatility at the start of the COVID-19 period resulted in a much larger than normal number of companies raising capital to ensure they were well capitalised to navigate such uncertainty.
“The most successful companies generally raised capital opportunistically for growth-related purposes,” he commented to INN.
Companies from all sectors and industries were successful in their efforts to increase cash to face the uncertainty brought by the coronavirus pandemic.
“The ability of ASX-listed entities to raise so much capital was testament to the depth of the Australian superannuation/pension system, which is amongst the largest in the world,” Baker Mckenzie’s Rumboll explained. “(This) allied to the flexible capital raising framework in Australia, which allows listed companies to raise capital from institutional investors and shareholders without the need for a prospectus, provided they ‘cleanse’ the market at the time of the offer.”
Additionally, the ASX and the Australian Securities and Investments Commission, which is the Australian securities regulator, temporarily relaxed rules to reflect the urgency of the situation, he said.
“The framework had proven itself in the global financial crisis of 2008/2009 and proved itself again in 2020,” Rumboll added.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
2020 saw ASX-listed companies raise AU$66 billion, the largest amount of capital in the last decade.