The Seven Group Holdings (ASX: SVW) share price is on watch today after an update on its institutional equity capital raise.
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Why is the Seven share price on watch?
This morning, Seven reported that it has successfully completed a $500 million fully underwritten institutional placement. That has resulted in 22.2 million new, fully paid, ordinary shares for those investors taking up the offer.
The "significantly oversubscribed" placement is a step forward for Seven and its capital management goals. Seven received strong support from new and existing domestic and international institutional investors.
The new shares from the placement come at an issuance price of $22.50 per share. That represents a 4% discount to the 16 April 2021 closing Seven share price of $23.43.
Proceeds from the placement, alongside the $50 million Share Purchase Plan (SPP), will be used for a variety of purposes. These include reducing overall net debt, restoring balance sheet flexibility, and improving liquidity. Seven has also flagged strategic investments, opportunistic acquisitions, and growing dividend payments as key focus areas going forward.
Managing director and CEO Ryan Stokes said:
We have a strong track record of disciplined capital allocation and remain committed to working to generate superior returns from our existing businesses and new opportunities to deliver value to all shareholders.
The $50 million SPP is non-underwritten with the potential to scale at Seven's discretion. The SPP will be open to eligible retail shareholders at the lower of $22.50 per share or a 2.5% discount to volume-weighted average price (VWAP) in the last 5 days of the SPP offer period.
The issue date for the institutional New Shares is 22 April 2021, with the retail SPP shares to be issued on 18 May 2021.
The Seven share price is one to watch when it returns to trade following the institutional placement. Shares in the conglomerate are up 77.4% in the last 12 months despite a slow start to 2021.
