Why the Computershare (ASX:CPU) share price will be on watch on Friday

The Computershare Ltd (ASX:CPU) share price will be one to watch on Friday after releasing an update on its capital raising…

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A smiling businessman sits at a desk with bags of mony, indicating a share price rise after funding has been approved

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The Computershare Ltd (ASX: CPU) share price will be one to watch on Friday.

This follows the release of an announcement after the market close relating to its acquisition of the Wells Fargo Corporate Trust Services business.

What did Computershare announce?

This afternoon Computershare announced the completion of the retail component of its underwritten 1 for 8.8 pro-rata accelerated renounceable entitlement offer.

The entitlement offer was aiming to raise approximately A$835 million (US$634 million) via a $500 million institutional entitlement offer and a $335 million retail entitlement offer.

Computershare successfully completed the institutional component at the end of last month, raising the funds at $15.05 per new share.

However, retail investors weren’t as interested in the offer.

According to the release, approximately 14,900 eligible retail shareholders elected to partially or fully take up their retail entitlements, subscribing for approximately 13.8 million new shares and raising approximately A$187.6 million.

This represents an aggregate participation rate of approximately 56% by value and approximately 41% by shareholder numbers.

What now?

Approximately 10.9 million retail entitlements not taken up by eligible retail shareholders will be offered for sale in a retail shortfall bookbuild.

Retail entitlements will be auctioned in a retail shortfall bookbuild, which will be a variable price bookbuild commencing with a floor price of $13.55 per new share. This will be conducted after the market close today.

After which, the company can focus on completing the acquisition of the Wells Fargo Corporate Trust Services business by the second quarter of FY 2022.

Is it a good acquisition?

Computershare’s CEO, Stuart Irving, believes the acquisition will be a big positive for the company’s North American operations.

Last month he said: “We are delighted to announce the acquisition of Wells Fargo Corporate Trust Services. It is a clear fit with our successful Canadian corporate trust operations and existing US operations. CTS provides scale with a top four market position, a platform for ongoing growth and increased leverage to long term growth trends and interest rates.”

‘The Acquisition allows us to integrate CTS’ deep client relationships and market expertise to deliver additional recurring fee revenue. We also see the potential for improved returns and margin expansion through new product development and innovative technologies, Computershare’s core competencies. We welcome the proven and experienced CTS team to Computershare, and we look forward to working with them as we deliver on our growth strategy.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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