Noting signs of promise and outperformance from microcaps, WAM Microcap has confirmed it is looking to raise a total of $75 million between a share purchase plan (SPP) and placement to make the most of undervalued growth opportunities in the sector.
Due to the restricted size of the offer, the proposed allocation policy for oversubscriptions will favour long-term, loyal shareholders and applications will be allocated depending on their length of time as a shareholder and size of holding, it explained.
Existing shareholders will be provided the opportunity to acquire up to $30,000 of fully paid ordinary shares in WAM Microcap, without incurring brokerage fees, at a 4.3 per cent discount to the current share price.
The offer stands at $1.455 per share, equal to the company’s estimated pre-tax net tangible asset (NTA) backing per share as at 31 March 2024.
Shareholders will be entitled to the fully franked interim dividend of 5.25 cents per share, which represents an annualised FY2024 fully franked dividend yield of 7.2 per cent and an annualised grossed-up dividend yield of 10.3 per cent on the estimated 31 March 2024 pre-tax NTA.
Chairman Geoff Wilson AO said the firm was “pleased” to provide its existing WAM Microcap shareholders the opportunity to increase their holdings at NTA and invest in a portfolio of quality Australian micro-cap companies.
“We greatly appreciate the trust, loyalty and support our shareholders have shown us since inception,” Wilson added.
He highlighted the “diligently constructed” investment portfolio had delivered strong performance and total shareholder return, increasing 25.7 per cent in the 12 months to 31 March 2024 and outperforming the S&P/ASX Small Ordinaries Accumulation Index by 11.9 per cent.
Since inception in June 2017, the investment portfolio has increased 16.4 per cent per annum.
Shareholders will have the opportunity to apply for the SPP via an online acceptance facility that will open on Wednesday, 3 April 2024 and close on Monday, 22 April 2024.
The placement is expected to occur towards the end of April 2024 to existing, long-term WAM Microcap professional and sophisticated investors at the same price and under the same terms as the SPP.
“We believe micro-cap companies are poised for recovery following the 2022 market sell-off and are optimistic for the year ahead,” remarked lead portfolio manager Oscar Oberg.
“We are seeing the most compelling opportunities to deploy capital since the coronavirus pandemic and believe there will be an increase in capital markets activity in the next 12 months.”
The firm added that WAM Microcap has the capacity to raise $138.9 million through the SPP and placement, though it is purposely restricting the size of the offer and is raising less than the heavily oversubscribed 2020 SPP and placement which raised $88.0 million.
With the $75.0 million of additional capital to be raised, up to $50 million will be allocated to the SPP participants and $25 million to the placement, and shares issued under the SPP and placement will rank pari passu with existing shares.
