Why is the Regal Investment (ASX:RF1) share price halted right now?

Let’s find out.

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A dollar sign embedded in ice, indicating a share price freeze or trading halt

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The S&P/ASX 200 Index (ASX: XJO) is having yet another day in the red so far this Wednesday. At the time of writing, the ASX 200 is down by 0.83% to 7,188 points. But one ASX company isn’t joining in that malaise. That would be the Regal Investment Fund (ASX: RF1).

Regal shares last traded at a price of $4.47 a share, right where they closed yesterday’s trading session at. And, at least for now, that’s the price they will stay at.

That’s because Regal Investment is currently in a trading halt. The company released an announcement this morning, gazetting the share price freeze. A few minutes later, we found out why.

Regal Investment Fund share price frozen for capital raising

Yes, the Regal Investment Fund share price is halted today because the company has announced a capital raising program. Regal is seeking to raise up to $97.8 million through a share placement. The placement offer is available for all existing shareholders. It will entitle these shareholders to apply for an additional share for every 3 shares already owned.

This 3-for-1 offer will be available at a share price of $3.79. According to the company, this price represents a 15.2% discount to yesterday’s closing Regal Investment Fund share price of $4.47. It also happens to equal this company’s Net Asset Value (NAV), as of 1 October. This offer has been named the ‘general entitlement offer’ by Regal, with the goal of raising up to $65.8 million.

That contrasts to an additional and concurrent share placement program that will be available for “eligible wholesale and institutional investors”. This program will seek to raise an additional $31.9 million.

Regal tells us that this new money will be earmarked in the following way:

The new capital raised under the Offer will be allocated to existing Regal strategies in line with the Fund’s investment objective, with an aim of further diversifying RF1’s portfolio across private and public alternative investments

About the company

The Regal Investment Fund is an ASX-listed investment trust. According to the company, it seeks to “provide investors with exposure to a selection of alternative investment strategies with the aim of producing attractive risk-adjusted absolute returns over a period of more than five years with limited correlation to equity markets”.

It has managed to book some impressive returns since its inception in June 2019. The Regal Investment Fund has returned an average performance of 39.1% per annum since its inception date, including a return of 45.1% over the past 12 months (to 30 September).

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Motley Fool contributor Sebastian Bowen 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 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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