Atlas Arteria shares on watch after $1.2 billion equity raising

Atlas Arteria Ltd (ASX: ALX) shares will be worth watching this week after an oversubscribed institutional equity raising from the group.

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Atlas Arteria Ltd (ASX: ALX) shares are on watch now they have returned to trading following a successful $1.2 billion institutional equity raising. The Atlas share price is up 0.26% in early trade so far.

What were the terms of the equity raising?

Last Thursday, Atlas announced a 4 for 21 pro-rata accelerated non-renounceable entitlement offer to raise $1.2 billion.

The placement received strong demand from institutional investors and was oversubscribed. This is a big vote of confidence for Atlas Arteria shares, particularly given the size of the raising.

The institutional component of its entitlement offer also had strong support with 95% of eligible institutional investors taking up their entitlements.

The bookbuild for the sale of remaining entitlements also saw strong demand from shareholders and was oversubscribed.

Atlas is still looking to raise $898 million at an offer price of $6.90 per share from its retail entitlement offer.

Why are Atlas Arteria shares on watch?

Atlas Arteria shares are worth watching now they have returned to the ASX boards following the strong show of institutional support.

The funds raised are also being put towards further value additive and cash flow positive expansion of the business. Atlas announced it would acquire a further 6.14% indirect interest in APRR and ADELAC

APRR is a high quality toll road group in France, which management notes is performing well, has access to growth opportunities and is also the largest holding in Atlas’ portfolio.

ADELAC is a smaller business which connects to APRR in southeast France. Combined, the 2 businesses comprise a 2,318 kilometre motorway network located in the east and south east of France.

Following the acquisition, Atlas will own a 31.14% direct interest in APRR and 31.17% in ADELAC.

Atlas is still waiting to clear anti-trust legislation and gain the relevant approvals in France. However, given the company’s existing large holdings in the 2 groups, there shouldn’t be too much doubt involved in the decision.

Foolish takeaway

Atlas Arteria shares will be on watch in the coming days as the company’s shares return from their trading halt.

The Atlas share price is up 26.49% since the start of 2019 and could be climbing higher before December.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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