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2.6¢ benitec biopharma limited

Ann: Change in substantial holding, page-15

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Miner2000

48 Posts.

04/07/15

04:28

Post #: 15579808
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Originally posted by Gerrado ↑

I agree Wacket, it certainly doesn't appear RA Capital is trying to bail, but I don't think they are necessarily intentionally trying to hold the price down. I reckon that's just the outcome of supplying the market with more shares than the punters will soak up. This sell down just appears to be part of a good investment strategy and I don't think RA Capital reducing their holding is any reflection on their faith in the company's future prospects - it's just part of their investment strategy and business as usual.

RA Capital has been selling right from the moment their shares were placed. First announcement was 20/6/2014 when approximately 1.2mil shares had been sold. On 19/2/2015 it was announced around another 1.2mil shares had been sold, and again just now on the 3/7/2015 similarly another 1.2mil sold. As shocks mentioned the timing of these announcements has been in accordance with disclosure requirements of the Corporations Act when RA capital's holding has moved 1% (relative to total shares issued being around 115m). There's nothing to suggest the shares have been dumped. Its more likely that bot has just been letting a few shares go at the most optimum times/prices over the last year.

In fact, going by the announcements the average price received by RA Capital over the period has been about $1.00. So on the sale of approx 3.6m shares RA Capital is down $250k which isn't even 1% of their $31m investment. I doubt this is really of much concern to them when they've got their 13m options at $1.26 expiring in 2019. If RA Capital continues selling at the same rate they'll have no shares left by 2019... but they will still have their options! And this is why I suspect the selling is all just part of the long term investment strategy. i.e. the options are what they invested for and the shares were issued simply to effectively allow RA Capital to draw down on their investment over time to free up some capital to provide cash flow to make other similar value adding investments.

To put things in perspective, if we take a very conservative valuation which has been floating around here of say $3b, and say after the IPO there is around 255mil shares issued, the shares will be worth $11.76. Say RA Capital exercises their 13mil options at $1.26, sell them on market at $11.76 they make $136mil... not bad for a $31mil investment even if they lose a few 100k along the way. And what if BLT is worth $30 billion plus by then?? Who knows maybe we'll get to see by Christmas. Any way the way things are going it doesn't look like RA Capital will be left red faced and empty handed.

I don't believe for a second RA Capital is silly with their capital. They did their research and let's not forget they are in the business of doing value adding deals. Selling down the holding doesn't necessarily mean RA Capital has lost faith in Benetic, and certainly doesn't mean RA Capital will lose their money on this deal. To remain active investors they've got to draw cashflow from somewhere they've also got to mitigate risk where possible and ultimately get themselves in a position where they can free carry their options. And let's be honest, at the end of the day they aren't in the business of ensuring that every retail investor/trader can buy one day and sell the next for a profit. RA Capital owes us nothing - For the most part we should count ourselves lucky just to be here ready to catch the next wave that the IPO brings.

As far as I see it in 2014 RA Capital bet on BLT being a winner (even before the trial started!). A few delays and descending share price has kept every one else away since. But BLT is now closer than ever to that positive inflection point. Now the risk is significantly lower. And if you are taking a slice of the pie now you are getting it for a better price than RA Capital.

The early bird gets the worm... but the second mouse gets the cheese!

Best luck to all.

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That is a great posting. Did I read correctly $11.76 valuation on a hypothetical basis for BLT price which is today closed at 75 cents. Interesting enticement in that case I would say. BLT does need good pumping to get over $1 in next 6 months. Watching side line for a 50 cents price - not far off seeing their price on 23 June around.

BLT Price at posting: 75.0¢ Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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