capital raising, page-15

Woodsie
Sophisticated Investors are defined under the Corporations Act and are generally wealthy people who the Government has deemed dont need the protection of ASIC. I.e. In this case a Prospectus and accompanying cost and complexities.
They have to have a Certificate from their accountant to prove they have net assets above $2.5 Million or Gross Income for last two years of $250,000.

Capital raising from this source generally does not do a lot of damage to SP in my experience as these people evaluate their investments very carefully and often have long term aspirations.

The danger comes IMO from subsequent SPP to us (in my case anyway)smaller investors and "Traders" who cry foul when the Sophisticated placement is made. Companies then raise more money by "making amends" to the "also rans" also at a discount.
Thereafter several things can happen -
1. Opportunists sell out at the prevailing price to get funds for the SPP at a discount price. This sends the SP down rapidly sometimes to the issue price. Those holding on lose!
2. Once SPP shares are offered some will sell out as soon as price rises to put them in profit.. Once again SP either falls or at best is capped.

This has been my experience many times..

So whereas an issue to "Sophisticate" investors can be a positive as the company has raised cheap funds giving them working capital, as soon as an SPP in announced I now run away and come back if I feel so inclined!!