For people who had doubts about the markets’ capability to digest large equity offerings, they are able to look no further than the $2 billion common share offering by Enbridge Inc.
The deal, the 2nd through the company previously 1 . 5 years, was announced after markets closed on Wednesday. The challenge for that underwriters was to place 49.14 million shares at $40.70. Given that the underwriters received a 7.371 million over-allotment option, the task ended up being to find buyers for the base deal (49.14 million shares) and the option. In most, the job was to find buyers for 56.511 million shares worth $2.3 billion of Enbridge shares. (Just before this deal, Enbridge had 867.Six million shares outstanding.)
Related
- Enbridge Inc willing to grow through acquisitionsEnbridge set to raise $2 billion of equity that will meet its needs ’till the end of 2017
-
-
-
Judging by where Enbridge’s shares are trading at on Thursday morning C they have traded in the range of $41.65 to $43.70 – we are able to safely conclude the issue had no trouble finding buyers. (Enbridge closed Wednesday at $43.16.)
So what’s the key?
There are four important aspects in the success of the deal: the caliber of the issuer (as well as on that measure Enbridge, whose dividend yield is incorporated in the 5 per cent range, is well known); the size; the price, and the discount to the recent trading price (Enbridge was priced at a 5.70 per cent discount to Wednesday’s close of $43.16.) Get one factor wrong and all sorts of hell breaks loose; get everything right and it is like money for candy.
