Financials the biggest COVID capital issuers

John Kavanagh

Financial services companies accounted for 20 per cent of capital raised by ASX-listed companies as COVID-19 took hold of the local economy.

A review of COVID-19 capital raising by law firm Herbert Smith Freehills shows that companies raised more than A$26 billion between mid-March and the end of June.

There were 80 raisings of at least $25 million each, with an average size of $333 million. Nine were over $1 billion each.

The top three industries by number of raisings were resources (with 20 per cent of raisings during the period), consumer discretionary (16 per cent) and real estate (13 per cent).

By value, financial services companies accounted for 20 per cent of the total capital raised, industrials 19 per cent and real estate 15 per cent.

Eighty per cent of funds were raised through institutional placements and share purchase plans. The participation rate in share purchase plans was 31.9 per cent, which is in line with long-term trends.

Sixty-six per cent of SPPs were oversubscribed and 72 per cent of applications for oversubscribed offers were scaled back, despite a large number being upsized.

Regulatory changes implemented by ASIC and the ASX, which relaxed long-standing restrictions, facilitated some of the raisings. Key changes were an increase in the placement cap from 15 to 25 per cent and removal of the one-for-one cap on non-renounceable offers.

Herbert Smith Freehills estimates that 39 per cent of placements made use of the increase in the placement cap and 26 per cent made use of the removal of the one-for-one cap.

The average share price discount to the pre-announcement close of the 80 raisings was 17.5 per cent and the average one-week aftermarket return on the offer price was 15.2 per cent.