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I have flipped a few at the start of trading this morning for over 24p and also bought a few at 22.85 to trade during the open offer period.
If the SP increases it might be worth flipping the 3/20 open offer that's available on the rest of my holding, but new funds maybe available subject to where the SP is for a quick trade (good timing re ISA Tax Year to add more funds if required also), but I am happy to flip all, as this will raise new cash for IES rather than sit on the side lines - as long as I sell above 23p to raise the cash needed to fund the open offer allocation. The open offer is now locked in, so this can be managed to take advantage if the share price does increase.
As the % discount is low (compared to some I've recently seen) plus none of the funds are paying back a large debt mountain, I can see this trading up-to 30p a share over the next few weeks. I am also expecting a couple of positive RNS's plus some media noise to help pin the SP at or around my short term target price of 30p.
Seen a few of these in my time and you can trade these when you have an open offer, for new investors or recent investors this is good opportunity to take new shares or increase their position in IES. I have enough shares for my medium term plans so do not intend to add to my holding, but happy to short term trade a few when the opportunity arises.
Once trading and the news has settled into next week (after the UK bank holiday), this is when we will see where this is heading in the very short term.
This could have been much better for existing shareholders, but also could have been far far worse in this market!!
Reset and start again but now with some much needed resource!
I'd describe the placing price as average, or semi decent at a push.. And I'd describe the overall size as around twice what I would have guessed.. so a hell of a lot more shares than I expected in play now..
This company is extremely well cashed up now granted, giving it serious bandwidth to invest to maintain it's market leadership in a hugely growing /exciting space..
Also we have a fine array of blue chip size shareholders, thus underlining ies.l's pedigree
And I have high hopes for late 24 and all 25 here now..
(Generally, I intend watching quietly for a good while to see how/where this settles down .. As I did two top up ahead of placing I'm thinking I'll not partake in this PI offer.. My top ups were a bit higher than current s/p but on a scheme of things it's little difference.. and they brought my average down somewhat too .. Alas my average is still a decent ways higher than 23p .. but Schroders for eg will still be somewhat higher than mine after this raise, at least (they were a lot higher again before - maybe 70 to 80 p ish i'd guess then - that coming meaningfully down again now.. granted))
Timings. The pipeline increased 17% since last reported in November 2023 giving comfort in our underlying medium term forecasts assumptions. New strategy changes margin potential We also note the development of strategy facilitated by the fund raising. In addition to the investment drive in the UK, the company will continue to focus on both the UK and North America as its core markets with a manufacturing of the cell stacks in Bathgate, Scotland and Vancouver, Canada. Other manufacturing capability has already been expanded to partner and existing strategic investor Baojia. Outside these core markets Invinity is moving to a manufacturing strategy based on a licence and royalty model. This will reduce the need for capital deployment while allowing better margin through royalty payments. We have modelled a growing proportion of non-core market royalty sales starting gradually from FY 25 and increasing to 50% of all business by FY 28. This initially grows the effective gross margin from 22% to 28% in FY 26 but by FY 28 we think the underlying gross margin of 25% would be improved to 38%. Forecasts adjusted for new model We have adjusted our forecasts for the equity raise and resultant dilution. We have also adjusted for the new strategy with an assumption that new sales from FY 25 onwards will be increasingly split between core and non-core markets and non-core will receive royalty revenue but will avoid the manufacturing capex required to deliver this. However, we have also increased opex to reflect additional spend on marketing and the expansion at Bathgate. We have additionally added an investment income stream to reflect the minority investment in UK projects. Dilution significantly offset by other gains As a result, our headline revenue forecasts from FY 25 drop as half of revenue is replaced by royalties, but operating profit rises to reflect a better overall margin. Additional investment income starts to appear in FY 26 and there is additional investment in the UK projects from FY 25 together with the £2m manufacturing spend in Scotland. The fund raise adds cash but also shares which rise to c400m shares. While this represents considerable dilution it is significantly offset by better operating profit, investment income and lower capex. As a result, our central case valuation falls to 86p from 134p and still represents considerable upside on the current share price.
FUNDED TO CASH GENERATION AND MORE Invinity’s major equity fundraising is targeting a minimum of £50m with half already committed by the UK Infrastructure Bank (UKIB). A second strategic investment of £3m has been committed by Korean Investment Partners. The raise will see Invinity to net cash generation, with £30m of the raise supporting the company’s scale up ahead of this year’s launch of the next generation Mistral flow battery. The raise will boost the balance sheet, reducing counterparty risk and unlocking sales and bigger deals, critical to maximising the potential Mistral.
Investment in UK Projects to Unlock Further Opportunities The funding will also allow Invinity to take minority stakes in long duration storage projects in the UK with at least £18m allocated. This will increase equipment sales, add project returns and help establish the company as a leader in the UK market. As investments in physical assets this value remains on the balance sheet and, along with the endorsement of two new strategic investors, supports the company as a counterparty. Invinity is targeting 96MWh of projects which would deliver c.£43m in sales. As one of the most rapidly decarbonising electricity systems globally the need for long duration storage in the UK is growing and we see leadership here as resonating in other markets. More intermittent wind generation will see storage duration and cycles lengthening which plays to Invinity’s competitive advantages against lithium-ion batteries. Additional support for long duration storage is now likely with the government consulting on price support. A potential move to zonal pricing could create more local price volatility benefiting long duration storage.
Strategic Investment Follow Major Due Diligence The funding will also support accelerated manufacturing scale-up of Mistral which completed performance testing in February. This will include a £2m investment to increase manufacturing facilities in Scotland and further expansion of manufacturing and supply chain in North America. The support of UKIB shows how helpful a policy bank can be to clean energy financing and its ability to develop Invinity as a national energy storage champion with global reach clearly demonstrates the additionality it seeks. Invinity will move its domicile from Jersey back to the UK further cementing its position as a UK company. This is UKIB’s first investment in a public company and this investment comes off the back of more than 6 months of detailed third-party due diligence. It is a public market investment with private equity diligence and as such we think the information content of the investment adds significantly to its monetary value.
FORECAST CHANGES Comfort in current trading Invinity has given a current trading update and for FY 23 remains on track to recognise at least £21.6m of revenue in 2023 and we remain comfortable with our £22.4m forecast. FY 24 is likely to be significantly second half weig
Doyezee
There are two types of dilution.Dilution of voting power, and dilution of value.
For the latter, although there is an increase in the number of shares, the value of the company has gone up for two reasons. It will receive a big injection of cash in exchange for the shares, and given the issue price was very near the market price at the time, there is minimal value per share dilution from that. Secondly the value of the company has gone up because the discount for the risk of not getting funding has been removed by the fund raise.
Hopefully these factors will be reflected in the share price over a short space of time. In the short term however, many of the potential buyers of the shares have been satisfied. So one can argue, that all else being fine, the best time to buy shares in any company is just after a successful share issue. Hope that helps.
Aren’t the new shares to be listed already sold to ii?
Aren’t the new shares to be listed already sold to ii?
But shares you buy now and before the new 200 million plus shares that will come into the market through new share offer and conditional placement will lose half there value through dilution won’t they?
I did the same, avoids the uncertainty of open offer allocations. Time will show if I jave been rash jumping in so soon.
Added more at 23, thank you sellers. Truly believe this will double from here within 12 months
I wonder how many people selling now bought in/more during that MM engineered rise earlier this week.
Re-calculated. Not much change. No take up then dilution 58.75%, take up your open offer entitlement and the dilution will be 52.5%.
The directors could have bought in the placing if they wanted to.
I guess they will just award themselves a large amount of free options
They will be allowed to in the open offer. They would be excluded from the others.
Why are the directors not buying in the placing?
You’ll need to do your numbers again after that rns
According to the RNS dated 2nd January there are currently 191,067,307 shares issued. If the fund raising completes in full, including the open offer, I calculate there will then be 437,118,707 shares in issue. So if you don't take up your entitlement in the open offer your dilution will be about 56%, whereas if you do take it up your dilution will be around 50%.
Does anyone know the total current amount of shares in circulation for IES and what the percentage dilution to existing shareholders will be given the new shares being offered?
I still like this company and what it has to offer. It's a relief that we now have an answer to the funding gap. Dilution is always a slightly bitter medicine but it certainly beats going into administration. I like the investment interest from Korea. It shows the company has worldwide appeal. And if you're going for a fund raise, you'd better make it a big one. The initial market reaction tends to always be a bit severe so better to get it over with in one hit. It'll be interesting to see how this swings in the morning. My gut says an immediate fall on open but good strength as the day develops as both the news and the scale of the opportunity sink in.
At least this answers the question as to where funding is coming from. Money from UKIB is indeed welcome and may encourage other investors to come onboard who are encouraged by first movers etc.
This is from the LAST fundraiser, not today’s:
The proceeds from the proposed Placing are expected to provide the Company with sufficient working capital to the end of June 2024 at which point the Company expects to have launched its next generation Vanadium Flow Battery ("VFB").
Let us hope that this is indeed the last fundraise and it will carry them through to financial independence…. The fact that the price is close to the current sp suggests confidence. The market could do anything tomorrow, I wouldn’t be surprised either way! But if that remark about June 2024 proves accurate then hopefully we will not have long to wait before news of mistral.
I guess IES needed the investor & cash as stage 1 - is the below statement stage 2!
‘In addition to the strategic investors announced above, the Company confirms it is also reviewing a number of potential partnerships concerning vanadium supply, Australian market development and U.S. supply chain.’
Still no debt which is sort of good, but lets see how the market reacts tomorrow and during the coming weeks.
I don’t think I will be putting in any new funds as part of the open offer, but subject to how the share price reacts I may sell some shares higher than 23p to recycle funds to take my allocation. If the market likes this it could offer the chance to reduce your average price without adding new cash!
I do think the market will like this as funding was the real issue for the low share price, not great on the dilution but I guess this depends on your average buy price and the price not too bad % discount for the value raised v the current MC! (but fully understand it’s not so good for the longer termers who bought at much higher pricing!)
Given the discount offered was small, it indicates there is a lot of confidence in IES's future.
It is good to see that UKIB has learned its lesson from Cornish Lithium and bought its shares at the same price as everyone else involved. UKIB was fast becoming a watch word for disaster for other investors. As TurkeyGuzzler observes a re-rating is now entirely possible and I would think quite likely now that finance for expansion/ working capital has been gained.
So around 28M shares for us and 217M for the instis, UKIB and Koreans. That’s quite some dilution for us.
Guess no other way to massively upscale.
Just hope eventually these dilutive big deals are really profitable so our investments will eventually pay off
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