Further placing thoughts28 Apr 2021 12:22
Some further thoughts on the placing;
- dilution effect is 16.8%, on the todays market cap, our shares will be worth 57.2p - HOWEVER, it's not just about the dilution, it is also about how the £19.1m raised will be used and how much closer to profitable this will push the company.
- the low discount seems to demonstrate that an II's cannot take a significant stake in DNL as on the whole, people are keeping hold of these shares, institutions are already holding 61.9% (pre offer) - I believe this will increase slightly post offer.
- the low discount is a very good sign of DNL confidence IMO, what we know about the take up so far is;
- The largest shareholder IP Group has 31.8% (pre offer) and has taken another 5.7m shares in the offer, IP Groups holding has been diluted slightly to 29.3% post offer - but the dilution is much less than retail investors (IP would only be able to take 909,000 shares under the same offer as retail investors. IP Group has invested another £4m (20% of the target raise).
- Interesting that a director of IP Group (Sam Williams) has also taken 28,571 shares (I assume a personal investment) which would be well over his open offer allowance.
- The CFO and a non-exec director have both taken a small number of shares, the CEO will take up 10,000 in the open offer (his entitlement is 12,000).
I have been reading about the price of placings, this is a quote from one of the sites I found "The placing price will usually be at a discount to the prevailing price. This is because investors in the placing will want cheaper shares. Rarely is a placing done at a premium because then the investors could just buy in the market for cheaper.
A good placing is done at a relatively modest discount. A stock that is deeply discounted can suggest that the quality of the company is poor due to lack of investor demand."
- the above confirms the shares are in demand and institutions are not only willing to pay close to full price, they are willing to take immediate dilution from the placing.
On WHO takes up the placing;
"The quality of the investors taking the placing is important. Would you rather institutional money who are going to hold their stock tightly? Or would you rather private investors who are looking to flip the stock and make a quick buck?
It can be useful to look out for holdings announcements to check which institutions followed their money. The merits of having a cornerstone investor who continuously backs the company can provide stability to the stock price when it comes to the placing agreement on the price."
- IP Group is a clearly very confident on this company which is one of their top 20 holdings
- I won't take the placing, my holding is too large a % of my PF and the discount is already poor value. I will remain a long term holder.
ALB
Sign In
Follow the stocks
