Australian companies rushed to the stock market in April, raising more money than any point in the last decade to fortify their balance sheets and take advantage of relaxed market rules that critics argue have favoured large investors at the expense of retail shareholders.

Companies raised $8.9bn in April, the biggest monthly total since the crisis period of 2009 and a sum that rivals the $11.1bn raised in the US — a market 28 times the size of Australia’s. The data, from Bloomberg, include deals greater than $20m and excludes the handful of small initial public offerings in the US.

The burst of activity reflects the push for companies around the world to raise money to get through the downturn caused by the coronavirus pandemic, which threatens to push millions of Australians out of work and end the country’s three-decade run without a recession.

The 36 deals in April spanned all sectors and were led by a A$3.5bn raise (US$2.25bn) by National Australia Bank, one of the big four that dominate the local market.

Businesses initially tapped the stock market as a defensive move, but more recently have moved to build war chests to hunt attractive assets.

“The first batch of capital raisings were genuine balance sheet exercises but increasingly companies are looking to raise funds for growth purposes and to participate in distressed sales,” said John McLean, head of capital markets origination for Australia and New Zealand at Citi.

The deals have delivered A$305m in fee revenue to investment banks such as Macquarie Bank, JPMorgan and Citi since the end of March, according to data from 33 deals tracked by Ownership Partners, a proxy adviser.

The wave of capital raising has been helped by emergency measures to ease access to funding, launched by the Australian Stock Exchange and the country’s securities regulator. Under rules introduced on March 31, companies can raise up to 25 per cent of their share base in discounted placements to big investors, an increase from 15 per cent. The measures will expire in July.

The arrangements let companies raise vast sums quickly and give large investors — such as the nation’s super funds that steward trillions of dollars in pension assets — access to cheap stock.

Webjet, a travel group hit hard by the shutdowns, raised A$231m in an April placement at a 55 per cent discount to its closing share price. The stock has since fallen but remains two-thirds above the price of the placement, delivering a bumper profit to large investors involved in the deal. NAB’s placement was priced 8.5 per cent below its closing stock price.

Bar chart of Proportion of equity raised in April relative to size of stock market (%)* showing Australia punches above its weight in equity capital raised in April

The rule change has sparked a backlash from some shareholder advocates. New placements can dilute the holdings of retail investors who have no say in whether they go ahead. Companies are required to offer a separate allocation of shares to retail investors, but these accounted for just 9 per cent of the money raised in the deals tracked by Ownership Matters.

“Retail shareholders have been systematically diluted because of preference being given to institutional shareholders,” said shareholder activist Stephen Mayne. He pointed to the NAB deal as particularly alarming. Retail shareholders received an allocation representing 17 per cent of the discounted institutional placement despite the fact they own 48 per cent of the bank’s stock.

“National Australia Bank confirmed how poorly treated retail shareholders are,” Mr Mayne said.

However, that consideration may be overshadowed by the need to keep banks in good health. In March, the central bank launched a new programme to provide the country’s lenders with cheap funding — a move that indirectly helped NAB’s capital raising.

“Having learned the lessons from the global financial crisis, the government moved very swiftly to avoid an erosion of confidence in the financial system,” said Mr McLean. “It gave the entire market a lot of confidence.”

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