ASX Capital Raise Roundup: Low expectations + strong earnings =
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ASX Capital Raise Roundup is a fortnightly look at ASX capital raisings.
Interest rates are marching higher, petrol prices are ramping through $1.50 per litre, and airline tickets are now regularly 50% greater than “normal”. All signs are pointing towards inflation which typically scares investors and results to lower equity prices. Yet, share prices are higher with a particular focus on growth companies (normally the most negatively impacted share prices).
It appears we have now created market conditions of low expectations. Investors are factoring in these inflationary price increases mentioned above – with no effect on market indices. In fact, share prices keep grinding higher.
Finally, as this technical setup persists, the urge to chase performance becomes even larger as FOMO sets into peoples’ minds.
Regarding fundamentals, North American banks’ earnings reports thus far have been stellar with lower loan loss provisions and the foreshadowing of increased net interest margins to further bolster revenues. Companies such as Bank of America and Western Alliance Bancorp are hovering at 52-week highs.
In the commodity complex, copper and energy companies should also report strong earnings improvements and investors will be focusing on management discussions regarding supply/demand imbalances.
In summation, we could be setting up for a case of low expectations plus strong earnings reports which would lead to higher share prices.
180 Markets was thrilled to be appointed lead manager for the capital raising for Living Cell Technologies (ASX:LCT), on a company transformative placement. The funds will be used to commence arrangements on a third clinical trial of ‘NTCELL’ which aims to treat Parkinson’s Disease.
The raise was completed at 0.85c per share and included free options for investors. A placement, Convertible Note and a Rights Issue will ensure that the company will have sufficient funds to advance its plans on the game-changing ‘NTCELL’ project.
LCT plans to source the necessary choroid plexus cells from pathogen-free pigs in New Zealand and encapsulate them in New Zealand and Australia. The clinical trial will take place in Sydney, Australia.
Shaun Factor, co-founder of 180 Markets said: “In another heavily oversubscribed 180 Markets Capital Raise, we are truly excited by the potential that we see in LCT. With only a $5m EV, we are hoping for massive upside and if the company follows its strategic plan we are optimistic that this could be the start of a great journey and with any luck, massive share price appreciation.”
Kalina Power Limited (ASX:KPO) has raised $10m through a two-tranche placement, led managed by Canaccord Genuity and co-managed by yours truly, 180 Markets. Funds from the placement will be used to advance the companies recently reported commercial activities underway in Alberta.
The raise was priced at 2.7c per share which represented an 18% discount to the previous closing price of 3.3c per share.
Ariella Grunfeld, analyst at 180 Markets said: “When we heard that Kalina Power, a clean technology company, had been granted its key permit for its 64MW Saddle Hills Project, we were extremely excited for the company as we have been following it for some time. This permit is a major milestone event for Kalina and represents the efforts from the team.
“We were tremendously pleased with the massive amount of interest we received for the placement and working alongside Canaccord was a pleasure.”
YPB Group LTD (ASX:YPB) has raised $3m through Everblu Capital. The raise was done at 0.33c per share and included 1.5 free attaching listed options, subject to shareholder approval.
Funds raised under the placement will be used for the technical development of Motif Micro, business development, marketing, debt reduction and working capital. YPB’s mission is to enable consumers to securely authenticate goods with their smartphone, and to simultaneously protect brands and provide consumer engagement through authenticity that triggers engagement.
In what was a very busy day for the team at Everblu Capital, as well as raising funds for YPB Group, on the same day they raised for Trek Metals Limited (ASX:TKM).
180 Markets received huge interest in the placement which was priced at 11.5c per share. Trek Metals will also conduct a $2m SPP which allows existing shareholders to participate in the capital raise.
Funds will be used to progress the next phase of the company’s Pilbara exploration strategy.
Trek Metals CEO, Mr Derek Marshall, said: “This has been a breakthrough year for Trek, with the maiden drilling program at Pincunah confirming the potential for a large-sale VMS discovery at Valley of the Gossans. This highly successful capital raising will put us in a very strong position to accelerate our exploration programs and unlock the full potential of this exciting project.”
Zelira Therapeutics Limited (ASX:ZLD) raised US$5m at an incredible 54% premium to the previous closing price to accelerate growth initiatives. The placement was placed to a US-based Family Office. The raise was priced at 6c per share with a 1:2 unlisted free attaching option exercisable at 9c per share with a two-year expiry.
The capital raise also included a US$1.5m investment in Zelira Dermatology for a 3% shareholding in that company, valuing Zelira at US$50m. Zelira is now valued at a massive US$122m, which comprises US$50m from the listed entity and US$50m in Zelira Dermatology which Zelira holds 78% of interest in post-funding.
In what was completed at another premium, Flexiroam Limited (ASX:FRX) has raised $1.5m at 4c per share. This was an amazing 18% premium to the previous closing price.
The raise was placed to two large existing shareholders of the company, as well as other professional and sophisticated investors. In what feels like a lifetime ago, November 2020, 180 Markets led managed a capital raise for Flexiroam priced at just 2.3c per share.
After the 180 Markets raise, the price skyrocketed north hitting a high of 9c, however given that the share price has fallen back, we are very glad that this company has been able to attract such a decent registry which has contributed to raising further funds at a premium.
Funds from this raise will be used on commercialisation, acceleration of market growth and further development for Flexiroam solutions, an internet of things, connectivity solutions platform.
Hitting the bourse this week
In what has been a very positive week for IPOs, we have seen four new companies hit the bourse. The most impressive of the new listings was Lykos Metals Limited (ASX:LYK) which is currently trading up almost an impressive 80% to its 20c IPO price. The raise, which was a spin-out of AXE, has three main projects which are prospective for nickel, cobalt, copper, gold, silver, lead and zinc, lithium and rare earths. What more could you want?
Other listings this week included NickelSearch Limited (ASX:NIS), iTech Minerals Ltd (ASX:ITM) as well as RAM Essential Services Property Fund (ASX:REP). All of them are currently trading at premiums to their IPO price.
Next week there are another seven companies expected to list. 180 Markets investors participated in majority of them, and as always, we would like to wish everyone the very best of luck in their investments.
Listing next week
180 Markets was established by investors for investors, and has become Australia’s leading deal sharing platform, with a difference. In just 12 months, 180 Markets has established a 1800+ strong investor base that has enjoyed access over 650 placements on the ASX, including more than 30 placements where 180 Markets has been lead manager.
If you are interested in Placements, IPOs and RTOs sign up at www.180markets.com.au
This article was developed by 180 Markets, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.