AIRLINK 194.51 Increased By ▲ 4.87 (2.57%)
BOP 10.16 Increased By ▲ 0.07 (0.69%)
CNERGY 6.70 Increased By ▲ 0.02 (0.3%)
FCCL 34.33 Increased By ▲ 0.19 (0.56%)
FFL 17.33 Increased By ▲ 0.24 (1.4%)
FLYNG 23.74 Decreased By ▼ -0.09 (-0.38%)
HUBC 126.00 Decreased By ▼ -0.05 (-0.04%)
HUMNL 13.90 Increased By ▲ 0.11 (0.8%)
KEL 4.78 Increased By ▲ 0.01 (0.21%)
KOSM 6.60 Increased By ▲ 0.02 (0.3%)
MLCF 43.80 Increased By ▲ 0.52 (1.2%)
OGDC 225.30 Increased By ▲ 0.34 (0.15%)
PACE 7.36 Decreased By ▼ -0.02 (-0.27%)
PAEL 41.98 Increased By ▲ 0.24 (0.57%)
PIAHCLA 17.48 Increased By ▲ 0.29 (1.69%)
PIBTL 8.45 Increased By ▲ 0.04 (0.48%)
POWER 9.11 Increased By ▲ 0.06 (0.66%)
PPL 196.45 Increased By ▲ 3.36 (1.74%)
PRL 37.60 Increased By ▲ 0.26 (0.7%)
PTC 24.22 Increased By ▲ 0.20 (0.83%)
SEARL 95.29 Increased By ▲ 0.75 (0.79%)
SILK 0.99 No Change ▼ 0.00 (0%)
SSGC 38.90 Decreased By ▼ -1.03 (-2.58%)
SYM 18.00 Increased By ▲ 0.23 (1.29%)
TELE 8.78 Increased By ▲ 0.12 (1.39%)
TPLP 13.10 Increased By ▲ 0.71 (5.73%)
TRG 62.75 Increased By ▲ 0.10 (0.16%)
WAVESAPP 10.45 Increased By ▲ 0.17 (1.65%)
WTL 1.73 Decreased By ▼ -0.02 (-1.14%)
YOUW 3.98 Increased By ▲ 0.01 (0.25%)
BR100 11,854 Increased By 40.1 (0.34%)
BR30 36,275 Increased By 40.9 (0.11%)
KSE100 113,699 Increased By 451.7 (0.4%)
KSE30 35,824 Increased By 112.6 (0.32%)

Australian companies will continue to raise cash through share issues in the second half of 2009, but most large deals have been completed and smaller sized deals will dominate, a top UBS banker said. Simon Cox, co-head of equity capital markets at UBS in Australia, told Reuters in an interview that share issues to fund take-overs will also be a feature of the second half.
Encouraged by a recent rally in the stock market, Australian companies have rushed to markets, raising about $18 billion in share sales so far in 2009, compared with about $41 billion raised last year.
That has propelled Australia to the top of heap for equity raisings this year, accounting for about 42 percent of all such sales in Asia-Pacific excluding Japan, according to Thomson Reuters data. "Our assessment is that, with the 50 leading firms, the vast majority of companies have got themselves into a position where their balance sheet is in good shape and there is no additional need for equity capital," Cox said.
"Equity capital will only be asked in the event of mergers and acquisitions, rather than necessarily just repairing balance sheets." UBS leads the league table in Australia, cornering about 26 percent market share in equity deals, followed by Deutsche Bank with about 17 percent, Thomson Reuters data showed.
Difficult credit markets have made it hard for Australian companies to refinance their maturing debts, forcing corporates to tap shareholders. "The market is probably over the hump in terms of raw cash being asked for. In terms of the number of deals, investors will be presented with as many deals in the past. But the ticket sizes will be smaller," Cox added.
Several mid-sized companies, including Hastie Group Ltd and GrainCorp Ltd, launched equity offers over the past week, seeking to raise less than A$100 million each. That compared with a A$3 billion offer from oil and gas producer Santos Ltd and a A$1.7 billion issue from property investor GPT Group Ltd earlier this month.
Despite the flurry, demand has been strong as fund managers are sitting on an investable surplus of about A$200 billion, according to a Citigroup estimate. Cox said there are still some unknown factors that would influence the final tally for 2009.
"If M&A kicks in, there will be some large equity raisings. There is some big question mark in the mind of the market about what Rio Tinto will do," he said. Speculation is rife that Rio could launch a rights offer, instead of pushing ahead with a $19.5 billion cash infusion from Chinalco.
"If economic conditions were to substantially deteriorate, against expectations...there will be some pressure on banks to raise capital again," he added. Last year, banks were the first to rush to market. The initial public offerings (IPOs) market is virtually dead in Australia, but Cox expects some pick-up in the second-half. "It's fair of say a number of potential IPO opportunities are being readdressed following the rally in the market. They would probably look to come to market in the third or fourth quarter. And they would be A$200-A$300 million type deals," he added.

Copyright Reuters, 2009

Comments

Comments are closed.