Hopefully, retail shareholders realise they can revoke participation in the Entitlement Offer at $2.10 that closes 23rd March.
It is crazy to buy TGF at $2.10 given you can buy on market cheaper now and (bar any brief compression around ex-div date) the discount should be 20% plus. The current discount is ~13% so the share price should underperform the NTA substantially.
It would be poetic justice for Tribeca if they raised little in the Entitlement Offer given the massive dilution and outrageously unsupported assertions made when the capital raising was launched.
Could ALL of the investors who spoke to Ben and supported the massively dilutionary capital raising please comment in this thread so we can count them and also provide you a little education on sound investing principles?
<< The portfolio manager behind the ASX-listed Tribeca Global Natural Resources says a $50 million raising at a steep discount to the fund’s asset value is in the best interests of shareholders, and will capitalise on a favourable backdrop for metals prices.
Investors in the $138 million listed investment company (LIC) could see their holding diluted as the manager announced that new shares would be offered at $2.10 each by way of a placement to wholesale investors, raising $19.4 million.
Tribeca’s Ben Cleary is firmly bullish on commodities as China reopens. Jessica Hromas
The offer price represents a 6.7 per cent discount to Tuesday’s closing price of $2.25, and a 21.6 per cent discount to the February 17 estimated post-tax NTA of $2.68.
Tribeca will also launch an entitlement offer to eligible shareholders to raise an additional $32.3 million, first reported by The Australian Financial Review’s Street Talk.
Issuing new shares at a discount can dilute existing shareholders if new buyers come in at a lower price.
“I don’t know how the board justifies to shareholders doing a placement to new shareholders at a discount to NTA, and how this would help remove the discount to NTA,” said high-profile LIC manager Geoff Wilson.
Wilson Asset Management is not an existing shareholder, and did not participate in the placement.
Portfolio manager Ben Cleary acknowledged that the raising could be dilutive, but said the benefits outweighed any dilution.
“I’m a big investor myself, I get the dilution angle, we structured the raising so it was more skewed to a rights issue to allow existing investors to participate in the placement,” he said, adding the book closed early at three times oversubscribed.
“The price is at a discount but at the end of the day, the opportunity is compelling and we had good support.
“I speak to my investors regularly, there’s always going to be some that are disappointed, but the overwhelming majority were positive on it.” Mr Cleary said the move would tackle investor concerns to some extent about liquidity as it sought to close the discount.
“LICs with more liquidity tend to trade at a premium and that was the feedback we were getting from our shareholders and advisers that this transaction, albeit at a discount, would increase the likelihood we’d have more daily liquidity and interest and that will help,” he said.
Tribeca Global Natural Resources (TGF) went public in 2018 at $2.50 per share. Bell Potter data shows its struggled to shake its discount, trading at a five-year average discount of 14 per cent.
Today, TGF is among the most discounted LICs on the ASX at an 18.2 per cent discount alongside Bailador Technology Investments (-30.6 per cent), Hearts and Minds Investments (-18.8 per cent), Carlton Investments (-20.5 per cent), Thorney Technologies (-28.8 per cent) and Naos Small Cap Opportunities (-19.8 per cent).
NTA performance has been volatile, recording a negative 28 per cent result in 2019-20 before rebounding 46.7 per cent in 2020-21.
Performance has been strong so far this financial year, up 17.3 per cent.
Mr Cleary said “trading back to a premium” is a key aim. He is bullish on the outlook for the commodity sector, particularly copper and nickel.
“We’ve been waiting to see what the data was going to look like close to Chinese New Year – everything we’re seeing is very supportive of commodity demand,” he said.
“Global demand for commodities like oil have been better than most would have expected three or four months [ago]. The demand signs all look pretty good to us and supply issues across all the commodities are continuing to get worse.
“We’re struggling to find a reason not to be positive.” >>
TGF Price at posting:
$2.03 Sentiment: Sell Disclosure: Not Held
(20min delay)