The unique structure of Auckland International Airport's capital raising programme might be designed for its large proportion of retail investors, but its institutions are already putting their hands up, with both city councils confirming they will take u
The unique structure of Auckland International Airport’s capital raising programme might be designed for its large proportion of retail investors, but its institutions are already putting their hands up, with both city councils confirming they will take up all of their entitlements.
The airport announced today it would be seeking to raise $126.4 million through a fully-underwritten 1-for-16 pro rata entitlement offer, with the funds used to help pay for its $166.7 million incursion into Australian airspace through a 24.55% holding in Cairns and Mackay airports in Queensland.
The unusual structure of the capital raising will see the institutional aspect wrapped up in a matter of days before the retail investment portion kicks in and remains open until midway through next month.
Speeding up the institutional part of the process allowed retail shareholders to have the benefit of knowing the outcome of the institutional entitlement offer, according to Auckland Airport chief financial officer Simon Robertson.
He said the airport had a “very strong and loyal” retail investor base, comprised of many small investors who would find the traditional method of offering rights on the market uneconomic due to brokerage fees and other transaction costs.
Instead, any small investors who did not take up their entitlement would receive any premium above the new share application price paid in the bookbuilds.
While this structure is designed specifically for the multitudes of small investors with money in the airport, two of its largest have also shown enthusiasm for the idea, with the Manukau City Council and Auckland City Councils already confirming they will take up their full entitlement.
The Manukau council will purchase 7.67 million shares through the offer at a cost of $12.66 million, keeping its current shareholding of 10.013% intact, while the Auckland council will fork out $16 million to keep its 12.71% stake.
Manukau mayor Len Brown said it was important for the council to take up its shares to guarantee the continuation of a regional stake in an important asset.
“Our shareholding enables us to continue to have a say in the direction and development of the company. One only has to see the tremendous development at and around the airport over the past decade to understand how important its continued growth and vitality is to the local economy.”
He said it was also a good decision on commercial grounds as the airport was a “quality asset which returns good dividends.”
The two councils will have a combined total of more than 22% when the councils are merged into the Auckland supercity, but last month were given clearance by the government to avoid the Takeovers Panel when that occurs.
