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Link Administration Holdings Ltd shares down on capital raising

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Investors seem lukewarm about superannuation fund administration service provider Link Administration Holdings Ltd’s (ASX: LNK) $300 million capital raising announcement.

Link shares were down to $8.11 at the time of writing.

Link will use the funds to pursue “strategic opportunities”, but Morgans thinks the timing of the exercise might be a tad optimistic with no actual acquisition details available.

Link has a history of successful capital raising exercises and this placement has an issue price of $8.50 per share which will lead to a pro-forma net debt reduction to operating EBITDA from 2.5x to 1.6x.

Credit Suisse has weighed in to say the extra capital would give Link the chance to capitalise on growth opportunities as they arise.

Fund manager Challenger Ltd (ASX: CGF) is a substantial shareholder of Link, with voting power of 5.07% of shares and investors who have interest in the space may also like to check out Magellan Global Trust (ASX: MGG) for buy opportunities sometime soon after a steady downturn in share prices out of the global equity fund for the last 12 months.

WAM Capital Limited (ASX: WAM) might also be one to keep on the watchlist.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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