The Pendal Group Ltd (ASX: PDL) share price is backtracking today after providing an update on its equity raise.
At the time of writing, the fund manager’s shares are swapping hands for $7.17, down 2.3%.
What did Pendal announce?
Investors are heading for the hills after Pendal shares come out of a trading halt today.
In this morning’s release, Pendal advised it has completed a fully underwritten institutional placement. The offer received significant interest in which both new and existing institutional investors participated to raise $190 million.
Pendal will issue around 27.9 million ordinary shares under the placement, representing about 8.6% of its entire issued capital. The price for each share is set at $6.80 apiece, reflecting a 5.2% discount to the dividend-adjusted last closing price of $7.17.
The newly created shares will be issued using the company’s existing placement capacity. Under listing rule 7.1, this allows up to 15% of its shares to be issued without shareholder approval. The company noted that the issued shares would not be eligible for the H1 FY21 interim dividend declared yesterday.
The monies raised from the placement will partly fund the acquisition of Thompson, Siegel & Walmsley LLC. Pendal has agreed to take over the investment management firm for a price of US$320 million. This will be paid through a combination of equity, debt and existing capital reserves from Pendal.
Pendal Group CEO Nick Good commented:
The response represents a clear endorsement of Pendal’s strategic acquisition of TSW, a business which is highly complementary to Pendal. The acquisition will accelerate our growth opportunities in the US market and delivers scale and diversification benefits for Pendal across investment capability, asset classes, geographies and distribution channels.
It is expected to deliver significant benefits for Pendal shareholders, strengthening the diversity of earnings and growth in shareholder returns.
Settlement of the placement is planned for this Thursday, with the new shares available for trading the day after.
Pendal share price review
It’s been a mixed year for Pendal shares, moving in circles for most of the 12-month period. Recently, however, the company’s shares reached a 52-week high of $7.80 before treading lower as a likely result of profit-taking.
The Pendal share price is roughly 20% higher since this time last year and is up 12% on year-to-date performance.