Non-renounceable offers where overs were completely banned

Arafura Resources (ARU) 2019: 7-for-20 at 8.5c to raise $23.2m with no overs and Noble Group cornerstone under-writing for first $7.2m. Only raised $8.1m with rest coming from under-writers.

AUB (AUB) May 2022: the insurance company announced the $880m acquisition of UK insurance broker Tyser with funding partially coming from a $350m equity raising, comprising a $71 million institutional placement and a $279m 1-for-5.2 non-renounceable entitlement offer. Both were priced at $19.50, a 12.8% discount to the previous close of $22.36. Macquarie and Goldman Sachs were the under-writers. This should have been a PAITREO and they didn't even offer retail overs. The insto offer raised $232 million but was only 81% subscribed and the retail offer only raised $5.9 million, leaving a shortfall of $41 million with the under-writers. All up, retail shareholders went into the raising owning 16.8% of the company but only ended up contributing 1.7% of the $350 million raised. With the stock above $31 in July 2024, the institutions which contributed the other $344.1 million at $19.50, are enjoying capital gains of around $200m or some 58%.

Australian Finance Group (AFG), 2020: $60 million raising comprising a $15 million placement at a 17.3% discount of $1.15 followed by a non-renounceable 1-for-5.5 at $1.15 with certain insiders partially under-writing the retail offer. Retail can't apply for overs which is a bad thing, particularly with insiders under-writing the guaranteed shortfall. The retail offer was 78% subscribed with $10.1 million raised and an additional $2.96 million coming from the under-writers. With the shares at $1.70 when the retail outcome was announced, this ended up being heavily dilutive for retail investors when combining the impact of the placement, the size of the discount and the retail shortfall.

BCI Minerals (BCI), 2020: 1-for-2 non-renounceable offer at 24c to raise $48 million with largest shareholder Kerry Stokes taking up his full allotment. The institutional component raised $20.8 million but the $27.2 million retail only attracted $5.5 million, leaving a $20.6 million shortfall with the under-writers. There were no overs, suggesting the under-writers were quite happy to pick up the stock. Stock finished the year at 30c so a 25% return for participants.

Beach Energy (BPT), April 2012: announced a 1-for-8 at $1.40 to raise $195m. The accelerated insto component raised $117m and the $78m retail offer finished heavily short with only $10.2m in applications. See outcome announcement.

Carsales.com (CAR), 2022: launched a $1.207 billion non-renounceable 1-for-4.16 at $17.75, a 14.5% discount to the previous close of $20.76, to fund the full acquisition of US business Trader Interactive. No overs for the 20,000 retail investors so this is a serious regression from the $600m PAITREO it launched last year. There was a 90% take up of the $842 million insto component with the shortfall going to the under-writers. The $365m retail offer followed and finished short.

Collins Foods (CFK), July 2017: announced a $44m 1-for-11 accelerated raising at $4.55 with no overs so the $18.3 million retail component only attracted $13.5 million or a healthy 74% take-up with balance going to under-writers.

ConnectEast, August 2009: after earlier raising more than $800 million with unlimited overs, came back with another $421 million 1-for-2 raising at 33c in August 2009 with no ability for retail to apply for extra shares.

Cover-More Group, October 2016: announced a 1-for-5.2 non-renounceable at $1.20 to raise $73.3 million. The insto component raised $61.7 million, but the $11 million retail component finished $3 million short with the balance going to under-writers.

Donaco International (DNA), February 2015: announced a fully under-written 10-for-21 at 60c to raise $132m for a Las Vegas casino purchase. The $39.6m retail offer attracted $24m leaving a $15.6m shortfall for the under-writers. Stock was at 4c in early 2024 so this has been a real dog.

Downer EDI (DOW), 2020: $400 million 1-for-5.58 non-renounceable entitlement offer at $3.75, a 12% discount to the previous close of $4.26. The $339 million institutional component was supported by 97% of holders but shortfall was given away at the offer price. The $61 million retail offer had no overs and unsurprisingly fell 49% short with the $30 million shortfall being handed away to institutional sub-underwriters. Retail investors started off owning just 15.25% of the company and were diluted by the $30 million shortfall because they were banned from applying for additional shares in an in-the-money offer. A month later the stock at $4.23 so this was serious dilution. Stock finished the year at $5.33 so the retail shortfall has been very costly.

Emeco Holdings (EHL), 2020: $149 million 1-for-2.1 non-renounceable at 85c, an 18% discount to the previous close of $1.035. There was a 94% take-up of the $111 million institutional component. Retail were banned from applying for additional shares and the $38 million retail offer only attracted $6.5 million in applications so under-writers picked up $31.5m shortfall. Stock finished the year at $1.14 so participants well in front. 4/10.

Flexigroup, now called Humm (HUM), 2020: $140 million 1-for-3.2 accelerated non-renounceable entitlement offer at $1.14, a 12.6% discount to the previous close of $1.305. Retail were banned from applying for overs so there was guaranteed dilution. The institutional component raised $79 million with strong participation but the $61 million retail offer was poorly supported only attracting $3 million in applications given the stock was hovering around $1. The retail offer was 50% under-written by Citi so the company said it received $36 million from the retail offer with $33 million of this coming institutional under-writers. Founder Andrew Abercrombie took up 25% of his entitlement and wasn't compensated for the dilution.

Independence Group (IGO), November 2010: in addition to a $113m placement, it conducted a 1-for-15 at $6.65 to raise $50.6m with the accelerated insto component raising $29.5m and the $21.1m retail offer finishing $9.6m short due to the ban on overs. The shortfall went to Bell Financial Group.

Infigen Energy, April 2017: announced a 1-for-4.6 at 89c to raise $151m. The retail component attracted $39 million which represented a healthy 74% take-up rate but the in-the-money shortfall still went to the under-writers and non-participants received no compensation due to the complete ban on overs.

Melbourne IT, May 2017: announced a 1-for-7 non-renounceable at $2.10 which raised $19 million from the accelerated institutional component but the $12 million retail component finished 39% short with the balance going to the under-writer because overs were banned.

MMA Offshore (MMA), 2017: 1-for-1 non-renounceable at 20c to raise $98 million, with retail component comprising $56m. 2 million insto shortfall shares were auctioned off at 24c but 191.5 m retail shortfall shares worth $38.3m were just gifted to the underwriters. See outcome announcement.

Oohmedia (OML), 2020: emergency $167 million raising comprising a $39 million placement at 53c, plus a 1-for-1 entitlement offer for existing shareholders at the same price with no overs. The stock had last traded at 84c before the offer was launched. The accelerated component of the institutional entitlement offer was supported by 91% of institutional shares and raised $117 million. The $14m retail component finished 27% short with $4 million worth of stock going to the under-writers.

Paperlinx Oct 2008: a 2-for-5 entitlement offer at $1.25 a share in October 2008 which raised $185 million and has been a disaster for investors. Retail component was $77 million but only $35 million was received given lack of overs and no renounceability.

Primary Healthcare (PRY, now Healius), Sept 2018: announced a 1-for-5.21 at $2.50 to raise $250 million with $157m from the insto component. The $94m retail component finished $22.5m short in what was a windfall for the under-writers at the expense of non-participating retail shareholders. Outcome announcement lacked detail.

RCR Tomlinson (RCR), September 2018: announced a 1-for-1.65 at $1 to raise $100 million and the insto component raised $70 million whilst the $30 million retail component finished 53% of $16 million short because there were no overs. The outcome announcement disclosed that 2,821 applicants contributed $14.4 million but the business went broke 2 months later making this one of the worst capital raisings ever.

Southern Cross Media (SXL), 2020: $169m raising at 9c comprising a $47 million placement and a $121 million non-renounceable entitlement offer with no overs. The placement comprised a ridiculous 68% of the pre-raising shares. Institutions took up 92% of their entitlements to the $102 million entitlement offer. The $20 million retail offer finished 34% short with the $6.8 million shortfall going to the under-writers. See outcome announcement.

Star Entertainment (SGR), 2023: $800 million emergency capital raising priced at $1.20, a 21% discount to the previous close of $1.52, comprising a $115 million placement and a 3-for-5 non-renounceable to raise $685 million. There was a 94% take up of the $480 million institutional component of the entitlement offer with the shortfall offered to institutions with no compensation for non-participants. The $205 million retail offer is to come and closes on March 13.

Super Retail Group (SUL), 2020: $203 million non-renounceable entitlement offer at $7.19, an 8% discount to the previous close of $7.81. Founder Reg Rowe agreed to take up his full $59.2 million entitlement (29.1%) and therefore won't be diluted. The $158 million institutional component (including Reg Rowe) was 95% subscribed with no disclosure on who got the $8 million shortfall. The failure to allow 10,000 retail shareholders to apply for additional shares in the $45 million retail offer, despite a specific written request to do so, has guaranteed a retail shortfall. Macquarie and UBS were the joint managers and under-writers, taking a fee of $2.05%, excluding the Reg Rowe component.

Virgin Australia, July 2016: 1-for-1 at 21c to raise $852 million with an 89% take-up rate but no disclosure as to how many retail shareholders participated.

Worley Parsons (WOR), 2017: 1-for-10 at $13 to raise $322m with no overs. $69m retail offer was 50% supported with good disclosure of the 4,705 applications. UBS under-wrote the lot. See outcome announcement.

Worley Parsons (WOR), November 2018: announced a 1-for-1.47 at $15.56 to raise $2.9 billion to fund $4.6b Jacobs acquisition with UBS and Macquarie under-writing. The accelerated insto component raised $1.8 billion and $1.1 billion retail offer brought in $573m in applications including through major shareholder Dar Group. The whopping $521m shortfall went to under-writers because overs were banned. This is the biggest non-renounceable to ban overs.

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