The market is back in love with Macquarie Group as the fears of January-March fade and the joys of risk and soaring markets convince investors all the bad news is over.
The share price is soaring; the company revealed yesterday it had been flooded with cash from the funding raising announced on May 1, with small shareholders contributing more than the company’s major holders have.
And, because the issue was made at a discount as the share price weakened, then rose in late April, shareholders have some very nice profits to take: around $10 a share in some cases (invested for barely a month).
That’s a nice gross profit of more than $255 million for those eager shareholders.
It’s no wonder the market wants Macquarie shares.
The company’s reply to a price query from the AX yesterday actually helped drive the shares up more than 6% to a high of $37.26. They ended up 91 cents at $36.30 after some profit taking in the afternoon.
The rebound for Macquarie echoes that seen in offshore markets, such as the US.
Macquarie shares retraced from just under $38 in the first week of last month, to just above $30.50 late last week. Friday they closed stronger, but took off Monday from $31.65 to more than $35 and drew the please explain from the ASX.
"We have noted a change in the price of the Company’s securities from a close of $31.65 on Friday, 29 May 2009 to a high of $35.10 at the time of writing today."
The company said no in all the appropriate areas, but then announced separately that it had successfully completed an equity raising under a share purchase plan (SPP), announced with the annual results on May 1.
It said it had received more than 55,000 applications from eligible shareholders for about $669 million of new Macquarie ordinary shares.(Source)
Macquarie Chief Financial Officer Greg Ward said Macquarie will accept all valid applications received under the offer, resulting in the allotment of a maximum of 25.2 million new shares.
The actual number of shares to be issued is subject to final processing of applications but will not exceed 25.2 million shares.
Under the previously announced terms of the SPP, the shares will be issued at a price of $26.60 per share and are expected to be allotted on or around Friday June 5.
That’s a nice killing for those shareholders who applied: they have nearly $10 a share in profit, or a return of 38% at a minimum, and more if they geared up to borrow the funds to invest.
"Macquarie announced on 1 May that had raised $A540 million in an institutional private placement at $A27.00 per ordinary share.
“In total, Macquarie has raised $A1.2 billion through the institutional placement and the SPP.
"Mr Ward said the capital raised would be used to further enhance Macquarie’s strong capital position and provide flexibility to continue to take advantage of current and future market opportunities."
