NIB share price halted amid equity raise and NDIS expansion

NIB is raising funds for a new acquisition…

| More on:
Three medical staffers sit at a table and chat happily wearing hospital scrubs

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • NIB shares are halted on Wednesday
  • The private health insurer is aiming to raise $150 million
  • These funds will be used to support its expansion into the NDIS market as a Plan Manager

The NIB Holdings Limited (ASX: NHF) share price won't be going anywhere on Wednesday.

That's because this morning the private health insurer requested a trading halt.

Why is the NIB share price halted?

The NIB share price has been halted this morning so the company can undertake an equity raising to fund a new acquisition.

According to the release, NIB is aiming to raise a total of $150 million via a fully underwritten ~$135 million institutional equity placement and a ~$15 million non-underwritten share purchase plan (SPP).

The placement issue price will be determined via an institutional bookbuild with a floor price of $6.90. This is a discount of approximately 8% to the NIB share price prior to its halt.

What are the funds for?

The proceeds from the equity raising will be used to fund its entry into Australia's National Disability Insurance Scheme (NDIS) sector as a Plan Manager.

NIB's first acquisition is Maple Plan, the seventh largest Plan Manager with ~7,000 participants and revenue of approximately $10.4 million in FY 2022.

But NIB is unlikely to stop there. The company notes that other possible acquisitions are under active consideration. These could support NIB in achieving its goal of managing 50,000 participants by 2025.

NIB's Managing Director, Mark Fitzgibbon, commented:

The NDIS has become a vitally important part of Australia's social capital and a significant economic sector. Already it supports 530,000 participants with more than 800,000 expected by 2030. NDIS funding is expected to double from around $29 billion in 2022, to $59 billion by 2030.

First quarter update

NIB also released an update on its performance during the first quarter.

The release reveals that its underlying operating profit was up 0.8% to $64.3 million during the period. And, after adjusting for the COVID-19 givebacks, revenue was up 6.5% on the previous corresponding period.

One negative, though, was that volatile financial markets continued to impact investment returns in the first quarter. This has led to its net profit after tax falling 8.6% to $41.6 million.

Fitzgibbon commented:

Our flagship Australian residents health insurance (arhi) business continues to benefit from heightened demand, which appears to be driven by lingering COVID-19 concerns, and difficulties in public system waiting times. We don't celebrate these difficulties. But they are a reality and point to a need for an even greater private sector role in healthcare.

Our adjacent international students and workers, New Zealand and travel businesses are also doing well, with the student and travel businesses quickly recovering from the pandemic blow.

Motley Fool contributor James Mickleboro 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 NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Capital Raising

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Why is this ASX lithium stock crashing 16% today?

Why is this stock having such a poor start to the week?

Read more »

happy investor, celebrating investor, good news, share price rise, up, increase
Capital Raising

Nick Scali share price jumps 14% to record high after raising $46m

Investors have responded very positively to the company's UK expansion plan.

Read more »

a man in a british union jack T shirt hurdles high into the air with london bridge visible in the background.
Mergers & Acquisitions

Nick Scali shares halted amid $60m capital raising and UK expansion news

This furniture retailer has its eyes on the UK furniture market.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

DroneShield shares freeze on $75 million for AI and inventory

This defence tech stock is rattling the can for a chunk of cash.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

What's happening with the NextDC share price on Thursday?

NextDC is raising $1.32 billion to accelerate its data centre developments amid the rapid growth of AI.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

Up 102% in 2024, here's why this ASX All Ords stock is now frozen

Seize the day. This company is ready to cash in on its renewed image.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why is this ASX 300 battery materials stock crashing 20% today?

Its shares are now down by 67% since this time last year.

Read more »

A man with a heavy facial hair growth and a comical look on his face holds his hands in a 'time out' gesture.
Energy Shares

Up 90% in a year, why is this ASX 300 uranium stock suddenly halted?

Here's why this high-flying stock is out of action today.

Read more »