The Ramsay Health Care Limited (ASX: RHC) share price has returned from its trading halt and tumbled lower on Thursday.
At the time of writing the private hospital operator’s shares are down 3.5% to $62.11.
Why was the Ramsay share price in a trading halt?
Ramsay requested a trading halt on Wednesday in order to undertake a $1.4 billion equity raising.
The private hospital operator is aiming to raise the funds via a $1.2 billion underwritten institutional placement and a non-underwritten share purchase plan of up to $200 million.
This morning Ramsay announced that it has successfully completed its institutional placement. It raised $1.2 billion through the issue of approximately 21.4 million new shares to institutional investors at a price of $56.00 per new share. This represents a discount of 12.9% to its last close price.
According to the release, the company received significant interest from both domestic and offshore institutional investors.
Ramsay’s managing director, Craig McNally, said: “We are pleased that the Placement achieved strong support from our existing and new institutional shareholders. The success of the equity raising is a clear endorsement of Ramsay’s long term strategy. It will strengthen our balance sheet and liquidity position, increase our financial flexibility, and ensure that we can continue to pursue our long term growth objectives.”
The company will now push ahead with its non-underwritten share purchase plan to raise up to $200 million.
Under the share purchase plan, eligible Ramsay shareholders (those that owned shares at 7pm AEST on April 21 2020) will have the opportunity to apply for up to $30,000 of new shares without incurring brokerage or transaction costs.
The issue price for the share purchase plan will be the lesser of the placement price and a 2% discount to the five-day volume weighted average price of Ramsay’s shares traded up to and including May 20.
Should you invest?
While I expect the short term could be difficult for Ramsay due to the pandemic and general difficult trading conditions in the sector globally, I think value is emerging.
Furthermore, while the short term is bleak, its long term outlook looks very positive due to its world class operations and increasing demand for healthcare services.
Overall, I think this could make it worth considering a patient and long-term investment in its shares.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care 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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