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"Successful outcomes are more likely to occur when a raise isn’t treated as a 2-week process. The likes of Moelis and Barrenjoey have a reputation for being long-term strategic partners. This data reinforces the old adage that successful capital raises occur over a period of years, not days.
We built Fresh Amplify to enable issuers and their partners to raise capital using the same best-practice approach that Australia's top brokers and bankers use."
- Ben Williamson, CEO of Fresh Amplify
"A successful capital raise sets a company and its shareholders up for long-term success. In order to achieve this success, a company needs to be able to engage with its shareholders and the broader market over a period of years. This list just shows that those brokers with a reputation for strong client relationships and long-term planning are the same ones that consistently achieve strong results."
- Placeholder #1
"The past 24 months have shown us the risk of riding on the market's coattails. At some point, the market turns, and those companies and their partners that have pursued a strategy that includes shareholder engagement and effective market communication are the ones that continue to perform despite the conditions."
- Placeholder #2
A successful capital raise is, at a bare minimum, defined as one in which the amount of capital needed is raised. The separation of good from great is different however, and revolves more around whether the deal was appropriately priced, required incentivisation to invest and whether it performed well in the aftermarket.
The data used for this ranking system was for offers announced between the 11th Jan 2021 and the 25th August, 2022. Data that was incomplete or had integrity concerns was removed from the analysis, which resulted in 60% of placements during this period being analysed (1,158 out of a possible 1,911 placements).
Success
If a deal does not raise the required amount, it has failed by default and is assigned a D rating. This overwrites all other metrics.
Pricing
The higher the discount of a deal, the more incentivising the company is doing to raise capital.
A deal at par or with a discount less than 5% scored highest, then between 5-10%, then between 10 and 15%, then 15-25%, and anything above a 25% discount scored lowest.
Required incentivisation
This refers to additions to the deal, most commonly options, that are added as a sweetener. The absence of options scored highly, whilst the inclusion of any options resulted in no additional points to the deal.
Aftermarket
The performance of a stock after a placement is a good indicator of the quality of the placement. Typically, most placements cause a dip in the stock price for the first couple of weeks out from the placement, but the severity of this can vary. Using 3 months out from settlement as our measurement, a stock price up by more than 10% scored highest, then between 0 - 9%, then -5 - 0%, then -15% - 5%, and anything less than -15% scored lowest.
Dilutionary
The more shares being issued compared to those already on issue means a more significant dilutionary effect for existing shareholders. If the placement accounted for less than 5% of shares on issue then the company scored highest, then 5-10%, then deals with greater than 10% dilution scored lowest.
Fairness
Fairness is a measure of whether existing shareholders had a chance to participate. Placements that had an attached SPP or EO scored higher than deals without.
Number of placements
A ranking system such as this tends to benefit brokers with fewer deals to their name. Any broker than led less than six placements over the analysis period was automatically disqualified.
Additionally, the ranking system reduced the overall score of brokers that led less than 32 placements over the analysis period. The score reduction was proportionate to the number of placements a broker led (i.e. the less they led, the stronger the reduction).
The higher the discount of a deal, the more incentivising the company is doing to raise capital.
Consistency
Raising capital is close to a zero-sum game. Strong raises have long-term positive implications for companies, whereas weak or unsuccessful raises can have far-reaching negative consequences. The Fresh team included a consistency factor in the ranking methodology that favoured the strength of "A-Grade" and "B-Grade" results and punished "C-Grade" and "D-Grade" punishments.
