The Goodman Group (ASX: GMG) share price has returned from its trading halt and dropped deep into the red on Thursday.
In morning trade, the industrial property giant's shares are down over 7% to $33.29.
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Why is the Goodman share price sinking today?
Goodman's shares are under pressure today after the company announced the completion of a major capital raising.
According to the release, the company has successfully raised $4 billion through a fully underwritten institutional placement.
These funds were raised through the issue of approximately 119.4 million new shares at $33.50 per share.
This represents a 6.9% discount to where the Goodman share price was before its trading halt.
The company will now seek to raise a further $400 million from retail shareholders through a share purchase plan (SPP).
Why is Goodman raising funds?
Goodman revealed that it is raising funds to position itself for long-term growth, particularly in logistics and data centres.
The company highlighted that demand for data centres remains strong across its key urban markets, and it continues to evaluate capital allocation alongside its investment partners.
The proceeds from the equity raising will provide financial flexibility for a range of growth initiatives, including the development of new powered shells and fully fitted data centre projects, expected to be operational by June 2026. These projects will reflect approximately 0.5 GW of power and have an estimated end value exceeding $10 billion. Goodman's share of the development costs over the coming years is expected to be around $2.7 billion.
Additionally, the company aims to progress other expansion opportunities within the data centre and logistics sectors while maintaining a conservative gearing and liquidity position. And in the short term, some of the capital raised will be used to repay debt and strengthen Goodman's liquidity for future acquisitions and developments.
Management commentary
Despite today's share price pullback, Goodman's management remains optimistic. CEO Greg Goodman commented:
We're very pleased with the strong support we've received from both existing and new institutional investors for this Placement. It highlights continued confidence in Goodman's established strategy of providing essential infrastructure for the digital economy.
The funds raised will enable us to optimise the opportunities we're creating over the long term, particularly through our data centre offering, and provide greater financial and operational flexibility to manage the next phase of growth.
The Goodman share price is up 17% over the last 12 months.
