I think the answer is if it goes to $1.30, everybody keeps their...

I think the answer is if it goes to $1.30, everybody keeps their wallets closed and the underwriter needs a new pair of underpants.

Below TERP?
Why would everybody keep their wallet closed if the raising was conducted for sensible reasons?

Because that is at odds with just about every entitlement offer I've seen (give or take a few % variance for market conditions, market acceptance for reasons put forward for raising the capital, that sort of thing..)


Share overhang for a while is likely the case.

Sure, but that's the case for any capital raising, irrespective of how it is structured.


If no underwriter, cost to do the entire cap raising went down the drain. But hey, its best-practice.

Which is why i said it is usual for there to be an underwriting agreement to be put in place


The market doesn't always act rationally and a lot of external factors come into play ... its called equity risk, For a more stable ASX listed company with steady cash flows, there is something to fall back on ... like a DCF calculation.

Sure, but that is more a comment about the quality of the company raising the capital and the reason it puts forward for doing so.

But there is no reason why stocks should trade below their new share issue price during capital raisings.

FYI the ASX did a fully renounceable rights issue at a 16% discount.

I assume the stock did not trade below the rights offer issue price.

APA are currently doing one and the share price is still above the issue price despite all the ructions in bond markets (as an infrastructure stock, it is a bond proxy), as is SOM (a company that is not yet profitable) and its share price is above the issue price despite the volatility in equity markets in recent weeks (oh, and it made a disappointing update to the market at the same time as the capital raising).

So, these are some current examples why - again- there is clearly no reason why stocks should trade below their new share issue price during capital raisings