Food Empire Holdings has raised net proceeds of $41.7 million by placing out 17 million treasury shares at $2.52 each, joining a growing line of SGX-listed companies tapping the capital market for more firepower.
Investors who took up the placement shares include Amova Asset Management, ICH Capital and Lion Global Investors, plus other individual and institutions, says the company on Sept 24.
The company plans to use the funds raised for working capital.
“The positive response from prominent institutional and strategic investors validates the company’s intrinsic valuation and sets a new benchmark going forward," says group CEO Sudeep Nair.
"A fair and resilient share price is strategically important to us, as it enhances our flexibility to consider shares as a potential tool in future corporate or strategic initiatives, while also supporting employee share-based incentive programmes and ensuring sustainable value creation for shareholders,” he adds.
CGS International and UOB Kay Hian have been hired as placement and sub-placement agents respectively.
CGS International's recently revised target price for Food Empire values the company at $3.09; UOB Kay Hian's Aug 15 update puts this stock's value at $2.73.
Besides its share base of more than 529.8 million shares, there are another 20,295,874 treasury shares.
The placement price of $2.52 is a discount of some 5.38% to the volume weighted average price of $2.6634 as of Sept 23.
According to Food Empire in its Sept 23 announcement, the placement can let it "recycle its capital productively" while enhancing trading liquidity and free float.
"Improved liquidity strengthens price discovery, supports index eligibility, and broadens the company’s institutional investor base.
"A fair and resilient share price is strategically important, as it enhances the company’s flexibility to consider shares as a potential tool in future corporate or strategic initiatives, while also supporting employee share-based incentive programmes and ensuring sustainable value creation for shareholders," the company says.
The placement will help broaden the institutional investor base and help position it to pursue growth opportunities, optimise its balance sheet and reinforce long-term investor confidence.
Food Empire shares closed at $2.66, down 0.37%.
