Investors who might have been hoping to buy (or sell) Pinnacle Investment Management Group Ltd (ASX: PNI) shares today would have received a bit of a rude shock this morning. Investors were treated to a notice informing the markets that Pinnacle shares would be placed in a trading halt “pending a further announcement”. So the Pinnacle share price will be staying at $17.50 until tomorrow when trading resumes.
Well, we didn’t have to wait too long to find out exactly what this announcement was.
Less than an hour later, Pinnacle released another announcement.
Pinnacle share price halted to acquire 25% of Five V Capital
The company announced it intends to acquire a 25% stake in Five V Capital. It will do this via a $105 million institutional share placement.
This represents around 3.3% of the existing shares on issue. Additionally, existing shareholders will be able to apply for up to $30,000 in new shares via a share purchase plan.
The new shares will be issued at a price of $16.70 per share, which the company was quick to point out represents a 4.6% discount to yesterday’s closing share price.
So of the $105 million that will be raised from this placement, $75 million has been earmarked for the FIve V acquisition. The remaining $30 million will be used to “replenish the balance sheet capacity that was used to fund the acquisition of the 25% stake in Coolabah in 2019”.
The offer will close on 15 December, with the new shares scheduled to commence trading on 23 December.
The company will come out of its trading halt later this week, when all eyes will be on the Pinnacle share price.
Five V is a venture capital and private equity company, representing Pinnacle’s first exposure to these spaces. It focuses on “ANZ businesses with an enterprise value of A$20 million–A$200 million”.
Pinnacle has told investors the deal will deliver “attractive returns for Pinnacle shareholders” in the following ways:
- Strategic investment that is expected to deliver attractive returns for Pinnacle shareholders;
- Consistent with strategy of increasing exposure to private capital markets, including private equity;
- High-quality investment team with a proven track record of delivering investment excellence;
- Provides leverage to Affiliate with attractive economics; expected to be broadly neutral to EPS pre performance fees; and
- Demonstrates flexibility of Pinnacle’s model and ability to partner with fund managers across all asset classes.
An FUM update and more…
In addition to this capital raising, Pinnacle also gave investors a company update this morning.
Pinnacle announced that its aggregate funds under management (FUM) stood at $90.9 billion as of 31 October. That was up $1.5 billion (or 1.7%) from the $89.4 billion the company recorded on 30 June.
Pinnacle also told investors it is expecting “strong momentum” going into FY2022. This was based on the fact its current FUM is more than 30% ahead of FY21’s average.