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Capital raisings accelerate

Capital raisings accelerate

The number of low-doc, accelerated capital raisings in the first half of 2009 has been higher than anticipated by the legal industry, according to Freehills partner Andrew Shearwood.Shearwood…

The number of low-doc, accelerated capital raisings in the first half of 2009 has been higher than anticipated by the legal industry, according to Freehills partner Andrew Shearwood.

Shearwood recently acted on the $64.4 million Peet Ltd rights issue, and said the steady flow of capital raisings has somewhat made up for the shortfall of activity in traditionally busy areas such as initial public offerings (IPOs).

"I think that what we're seeing in the market is that although there are very few, if any, IPO's in the market, there is a flow of capital raisings that has exceeded what we were expecting a few months ago."

Accelerated capital raisings involve companies making a two-stage offering to the market - fast-tracking the entitlement of wholesaler investors to participate, before opening the offering up to "mum and dad" retail investors.

Shearwood said the economic downturn may be a factor, but attributed the recent run of accelerated capital raisings to their multi-faceted benefits for issuers, institutional investors and retail investors.

"Often companies are in a position where they are keen to know what the market thinks and how much they are likely to raise, but at the same time they want their mum and dad investors to participate on the same terms.

"By dealing with the wholesale investors first...they are the ones that are more likely to make a decision to invest more quickly, or to make a difference, because they are in a position to invest larger amounts of money."

-Laura MacIntyre

See Deals coverage for further details about the Peet Ltd capital raising

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