ASX Capital Raise Review is a weekly look at ASX capital raisings.

We finally got the big macro event of the week out into the open with the United States Federal Open Market Committee (FOMC) keeping interest rates unchanged, but leaning towards raising rates by the end of 2023.

After all the nervous market jitters from investors, the actual news turned out to be a… big non-event.

The effects of investors’ nervous sentiment from the above macro continue to be felt within capital markets activities. Traders are looking for company-specific capital raises as places to invest such as Bryah Resources (ASX: BYH) and Argonaut Resources (ASX: ARE). Both businesses have significant upcoming drilling programs which are attracting interest due to their large upside potential.

In the REIT sector, we also are seeing situation-specific demand for capital as evidenced by National Storage REIT (ASX: NSR) and private real estate operator Assembly Funds raising cash. Both companies will use funds for in-demand asset acquisitions.

What’s more, both companies boast strong management pedigree including the backing of the Lowy family with Assembly Funds.

Finally, the actual Placement prices are taking place at more favourable investor terms, often taking place with attaching free options.

Weakness in IPOs

 In the IPO portion of Capital Raising, we are noticing significant weakness. We, at 180 Markets believe this softness is being driven by both investor skittishness and an overwhelming amount of supply – there are at least 40 companies working through filing documents with the ASX! In many cases, share prices are trading immediately below the initial offering price. This creates a negative momentum scenario with investors selling shares on any small uptick of share price.

Finally, market conditions have simply changed from the timing of the initial investor commitments to the present, thus creating more muted expectations. Even long-term investors often operate with a short-term mentality!

Placements this week

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Triangle Energy Limited (ASX: TEG) raised $10m through CPS Capital Group at 2.2c per share. The raise was originally only going to be for a total of $4m however, due to high demand, together the company and lead manager decided to increase the size of the raise.

Investors will also receive a 1 for 2 free attaching option exercisable for 3.5c, with a 2-year term. Directors will also be participating for $250 000.

The funds from the capital raise will be used for the Cliff Head Oil Field, L7,EP-437 and WA-481-P permits as well as corporate and working capital.

Emperor Energy (ASX: EMP) raised $1m in a heavily oversubscribed capital raise. As well as this, Emperors’ creditors will be allocated shares to repay outstanding debt. There was no broker to the placement.

180 Markets was glad to assist the company and the team at Emperor with raising the funds. The issue price of 3c per share represented a 14% discount to the 5-day VWAP of 3.5c a share.

The net proceeds of the placement will help strengthen the company’s balance sheet and provide important funding to the company’s exploration activities.

Pentanet Ltd (ASX:5GG) raised $20m at 72c per share through Euroz Hartleys Limited and Bell Potter Securities Limited.

The company has only been listed on the ASX since January 2021. In its short time on the ASX market, Pentanet which IPOed at 25c per share, has surged to recent highs of $1.10. Pentanet has grown its subscriber base by over 20% in just 6-months. The company has recently acquired 5G spectrum to accelerate its expansion of its wireless network rollout, and expand its Cloud Gaming growth strategy to support strong GeForce NOW infrastructure.

The use of funds will be primarily utilised to accelerate fixed wireless and Cloud Gaming network expansions, plus general working capital.

Pentanet Managing Director Mr Stephen Cornish said: “It is good to see the strong support from investors, highlighting an increased level of understanding around the relationship between cloud gaming and 5G, now enabling us to move Pentanet into the next stage of growth early.

“It is a fast-developing market and we have taken advantage of market opportunities in both our Fixed Wireless and our Cloud Gaming services to strengthen our capabilities.”

Variscan Mines (ASX: VAR) raised a total of $5m at 8c per share. The raise was managed by Canaccord Genuity and was cornerstoned by Plutus Capital together with current shareholders.

The funds from the raise will be used for drilling and exploration programs at the San Jose Zinc Led project in Spain and general working capital.

Just one month ago, Variscan was trading at 3c per share and has hit recent highs of 15c. This was due to major Zinc – Lead discovery at its Novales Project in San Jose.

Iron Gate Group (ASX: IAP) completed a $50m institutional placement at $1.47 per share through Macquarie Capital. The proceeds of the placement will be used in part to fund the acquisition of a 100% interest in a property located in Canberra which implies an initial yield of 5.31%.

IAP CEO, Graeme Katz, said: “This transaction builds on IAP’s track record of acquiring strategically located, good quality income-producing properties. The property has had approximately A$12.6 million spent on fit out and refurbishment works in the last two years including a full atrium lobby upgrade, the addition of end-of-trip facilities and refurbishment of on floor amenities.”

Trigg Mining LTD (ASX: TMG) is placing a potential shortfall of its rights issue through Mahe Capital.

180 Markets was pleased to be assisting Mahe Capital placing the stock at 10c per share with a free attaching 20c option. The options issued will have a 2-year expiry and will be listed on the ASX.

It is expected that the company will raise a total of $2.3m with all eligible directors having participated in the rights issue. Funds will be used to complete an Indicated Capital Recourse estimate and Scoping Study for the companies Lake Throssell SOP project in Western Australia.

The company has been listed on the ASX for 2 years after an IPO with issue price of 20c led by CPS Capital Group. In its first year of trading it hit lows of 2c per share, after that it recovered back to 20c and is now raising money at 10c.

It’ll be interesting to see how the share price performs from here on. Who said investing in small caps isn’t risky?

Thinking about taking the IPO leap?

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Flynn Gold (ASX:FG1) listed earlier this week after raising $10m at 20c per share. Currently the shares are trading at 15c which is a disappointing result for all investors who participated.

At the time of raising the funds, the raise was heavily oversubscribed through the lead manager Taylor Collison. Flynn will be using the funds raised on its two emerging gold camps. The first one is in the Pilbara, which is located in Western Australia, currently adjacent to the Hemi discovery by De Grey Mining.

Flynn also has tenements located in north east Tasmania which has exciting prospects. Defiantly not a good week for gold companies listing on the ASX.

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There were two RTOs this week, Auking Mining (ASX:AKN) and Hitiq (ASX:HIQ). Both of these 20c relisting vehicles performed very differently on first day.

Hitiq opened up 50%, at its high of the week. It then headed south, and is since trading close to issue price.

Auking opened down at 16c per share, and has traded around that price this week. Investors are clearly struggling with the current load of new listings.

Next week there are five companies scheduled to list which will give us an interesting insight into how investor appetite for new companies listing.

180 Markets’ recent performers

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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.

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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.