Capital raisings strange behaviour - Aussie Stock Forums

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  1. #1

    Default Capital raisings strange behaviour

    I noticed on Tuesday that Spotless Group (SPT) went into trading halt after the announcement of their financial results and the announcement of a 100m capital raising (71 to instos, the other 29 retail). The raising was announced at 2.16 a 30cent discount the last traded price of 2.46 on Monday afternoon.

    Today, I would have expected the SP to open maybe midway between the issue price and the last traded price. Instead it opened flat, then dropped off but has traded strongly in the afternoon session to finish up 5%.

    Is there any reason for the rise in the SP when we would normally expect a substantial drop?

  2. #2

    Default Re: Capital raisings strange behaviour

    It did look strange if you think that every capital raising results in investors thinking its not going to end well.

    SPT seem to think they are going to mop up a few opportunities with this - maybe that's why there was so much optimism?

  3. #3

    Default Re: Capital raisings strange behaviour

    what do u mean by mop up a few opportunities.

    im curious as well cause the same thing happened to GMG. not that im complaining since i made a free bundle of cash. But entitlements were alocated today and it actually went up for a while and the days prior, it was rallying.

  4. #4

    Default Re: Capital raisings strange behaviour

    the expected outcome is that the SP gets peppered from its last traded price towards the issue price as those people that have been issued new shares sell there shares to profit from the free money they have been given (last traded price - Issue Price).

    I have seen this time and time again, but there have been a few exceptions so far.

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