AIM-listed and euro-quoted property investment company Eurocastle Investments completed its capital increase to raise a total of €99m including a 10% greenshoe. The offer closed on June 23 as the company sought to raise finance to pay down debt and finance further investments.
The deal gained good support from existing shareholders but also achieved the secondary purpose of widening the shareholder register. Deutsche Bank and Morgan Stanley were joint books.
Trading in the stock has always been thin but the share price did not trade below €17.25 throughout the process. The stock had traded down from above €18 prior to the announcement of the deal, which represents approximately 30% of the company pre-money. The stock closed at €17.33 on Thursday and the deal was priced off the close.
Demand was strong and the deal was priced at €17.25, the nearest 25-cent multiple below the close, where it was more than five times covered. The fact that the stock did not trade below €17.25 despite the thin trading gave some support to pricing at this level. Some 5.74m shares were issued.
Support for the offer was particularly strong from US accounts, which are more familiar with Fortress Investment Group – which manages the company. The stock immediately recovered after the deal to close up 6.75% at €18.50 on Friday.