MARC HASENFUSS: Is raising fresh capital in a less than stellar market a good idea?
Why didn’t Sygnia and Advanced not take the opportunity to raise fresh capital when sentiment was more buoyant?
I thought it rather interesting that two of the JSE’s most vaunted "game changers" — asset manager Sygnia and day-clinics developer Advanced Health — both detailed rights issues last week.
The companies need fresh capital for (very) different reasons: Sygnia to fund the recent acquisition of db X-trackers from Deutsche Group Holdings, and Advanced to shore up its strained balance sheet to continue its day clinic roll-out.
The most startling similarity, though, is that both counters are embarking on their rights issues at a time when their share prices are well off record highs. It’s worth remembering that both companies enjoyed frothy market debuts — Sygnia sped to R19 in mid-December last year and Advanced touched a high of 275c a few months after listing in April 2014. Sygnia is pitching its offer at 900c/share, while Advanced will dangle new shares at 130c/share — both rights priced at less than half their highs. The cynical investor in me might question why Sygnia and Advanced did not take the opportunity to raise fresh capital when sentiment was more buoyant. You know ... when the ducks are quacking, feed them ... much like Jannie Mouton’s PSG Group did at the end of 2015, raising R2.2bn in an accelerated bookbuild when the shares were trading at a premium to the sum-of-the-parts value. Fluorspar flash I noted (with a great deal of interest) a report in Business Day that SepFluor, the unlisted f...
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