"Deep Capital Pool"16 Jul 2023 12:43
I've been thinking about the shenanigans that have gone on here with the sp since the leak.
In the rns of 2 May 2023 it states under "the purposes and objectives of the ASX listing are to;" and then down in the list is what I consider the important element,
"provide Greatland with access to deeper pools of capital to support longer term goals"
The main driver for creating a deep capital pool is to bring companies and investors primarily closer together and to attract growth from both. It purposes a large amount of capital that is available for investment. The depper the pool, the more capital there is for investment obviously.
It could have been worded differently to omit the word "deeper" but "deeper" is the clue here, that isn't said unless substantial sums of investment are under consideration.
Such capital is usually derived from private equity firms and, of course, hedge funders. Private equity is unlikely here I would have thought as they usually like to try and take control of a company so hedge funders is likely to be the preferred route imo. Needless to say, hedgies usually target investments and pools of securities that are primed for significant gains, so just bear that in mind folks, they will be looking for a very decent ride up in the sp. Ideally, they focus on stock where given time, they see the possibility of beneficial mergers or acquisitions. And as we all know, hedgies tend to be more in the know with what is happening with a company, via internal methods of communication through the company than retail investors do.
So in summary, that reference to "deeper pools of capital" is massively significant.
However, it then stands somewhat at odds with what SD stated in one of the recent interviews, wherein he stated that 3 banks were willing to provide loans to the company, and the impression I got from that was that he would prefer to go that route as a first port of call. I would therefore like SD to come clean and indicate which route is first and which is second. To me, it makes sense to go the route of the banks first in the latter part of 2023 to avoid dilution and then to look at going the "deeper pools" route later in 2024 when production has commenced. This would mean the sp would be much higher of course and any discount offered to the hedgies would be at an already much higher entry price. So what does he offer as an attractive benefit to Aus investors for the ASX listing, if SD waits until say later in 2024 for the "deeper pools" investment and possible dilution at that stage?
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