Steadfast (ASX:SDF) share price pushes higher following placement

The insurance broker’s shares have emerged from a trading halt. Here are the details

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The Steadfast Group Ltd (ASX: SDF) share price has hit a record high today after the company emerged from a trading halt. This comes after the insurance broker released its full-year results and announced a major acquisition yesterday.

Today, however, the company revealed it has successfully completed an institutional placement.

At the time of writing, Steadfast shares are swapping hands for $4.86, up 3.62%.

Steadfast completes placement

Investors are excited about how the company is tracking along, pushing up the Steadfast share price in the process.

According to its latest release, Steadfast has successfully raised $200 million (before costs) through an institutional placement. The offer was significantly oversubscribed with support from both existing and new investors.

In total, roughly 44.3 million shares will be issued for a price at $4.51 apiece. This represents a 2.4% discount to the dividend-adjusted last closing price of $4.62 on 13 August, and a premium to the underwritten floor price of $4.35 per share.

Settlement of the shares is expected to take place on 19 August, with allotment the following day.

In addition, a Share Purchase Plan (SPP) is also being conducted to allow retail shareholders to participate in the offer. The issue price for the SPP will be equal to the lesser of $4.51 or a 1% discount to the volume-weighted average price over the five trading days ending on the closing date of 13 September.

The funds will be used to acquire Australian privately owned insurance broker Coverforce for an enterprise value of $411.5 million. This will comprise $200 million from the placement, along with the remaining amount of $217.8 million via vendor scripts.

Coverforce has a robust track record of solid earnings growth and high margins in its history. The acquisition gives Steadfast an opportunity to strengthen its position as the leading general insurance broker network in the Australasia region.

The acquisition is scheduled to be completed on Friday 20 August, 2021.

About the Steadfast share price

Over the past 12 months, the Steadfast share price has accelerated by more than 40%, with year-to-date gain of 20%. The shares have also been on a continued growth trajectory since the company’s initial public offering (IPO) in 2013.

Based on today’s price, Steadfast has a market capitalisation of around $4.24 billion, with 871 million shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Steadfast Group Ltd. 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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