02/04/2002 - 22:00

Stockbrokers leading the charge in capital raisings

02/04/2002 - 22:00

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EQUITY capital raisings (initial public offerings, placements and rights issues) represent one of the key segments in the corporate finance market.

Stockbrokers leading the charge in capital raisings
EQUITY capital raisings (initial public offerings, placements and rights issues) represent one of the key segments in the corporate finance market.

A handful of stockbrokers, notably DJ Carmichael, Euroz Securities, Hartleys, Macquarie and Paterson Ord Minnett, are lead managers for the vast bulk of capital raisings for WA companies (see full table).

However, the prominence of these firms, based on dollars raised, does not reveal the full picture.

In a significant number of capital raisings, the brokers play a supporting role under the guidance of specialist corporate advisers.

And many small floats come to the market without the involvement of this group of brokers.

The advantage that the large brokers have over their competitors is that they bring together all of the ingredients for a successful capital raising.

Their corporate finance department works with the client to provide strategic advice and structure a transaction, their research department provides the requisite industry knowledge, and their retail and institutional dealers can place the stock with investors.

The larger brokers do not have it all their own way. Occasionally the smaller stockbrokers in Perth will secure a lead manager role in capital raisings.

More significant is the role of independent corporate advisory firms, which are not tied to a specific finance provider.

The corporate advisers often start working with companies at a relatively early stage of their development and assist with raising both public and private equity.

For instance, Poynton and Partners has raised $96 million in private equity for companies in the IT, healthcare, renewable energy and bioscience sectors over the past two years.

Another example is Grange Consulting, which recently raised seed capital for Lignor Pty Ltd’s proposed $150 million lumber plant.

Grange’s Ian Macliver said the advisory firms often work in conjunction with stockbrokers to complete public capital raisings.

In some cases, the adviser will arrange a beauty parade in order to select the most appropriate underwriter or broker for their client.

In other cases, particularly for small IPOs, the broker may invite a ‘boutique’ firm to manage the float process.

The following examples illustrate the prominence of specialist advisory firms in IPOs and other public capital raisings over the past two years.

Poynton and Partners has managed capital raisings of $79 million, for public companies in biosciences, financial services and shipbuilding.

O’Callaghan & Co has been corporate adviser for capital raisings of $38 million, including for Independence Gold, Kimberley Diamond, Oriel and Namakwa.

Grange has been corporate adviser for capital raisings for BioProspect ($6 million), Hotham Wines ($6 million) and Planar Semiconductor ($3 million), among others.

Mooney and Partners has provided float coordination for eight IPOs, including Audesso Mining, Gemstar Diamonds and Metals Quest Australia.

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