Friday, 1 April 2016

Syndicate Room's new public offerings


We wrote this piece before the Healthcare Royalty Trust IPO was cancelled and the Scancell offer was heavily under subscribed. We decided not to publish it before both had 'completed' so as not to cause any distress. Looks like this has some way to go before it becomes a force to be reckoned with. Scancell's share price is as we read it below the 'offer' 'discount' price (as we predicted below). 

Syndicate Room is breaking new ground - changing the face of SME investment. Or that is what they claim.

The new IPO/public placement deal they have set out makes for exciting reading. You as a member of SR can partake in the sorts of deals that only well connected City types, VCs and Angles usually have access to. IPO's, new placings and offerings.

So what can we make of the first two deals on offer?

One is a slightly dull Health Trust IPO and the newest one, announced today with a royal fanfare, is part of a private offering. SR have called this second, incorrectly, the first Public Placement to be crowdfunded. It is not a public placement unfortunately. Oops.

Scannell Holdings PLC recently issued 20m new shares in a public placement on AIM. This was fully subscribed and none of it has gone via SR. They then offered existing shareholders a private offering - a kind of Rights Issue. As part of this offering, they have invited SR investors to tender for shares at the offer price of 17p. However this is not quite as good a deal as SR would have you believe.

1. SR investors will only get the scraps of what is left once all existing shareholders have decided to take up their allotment or not. So they may get nothing at all. Regarding EIS, SR say that if you buy £10k plus, then you can claim back EIS. However, again, that is not quite true. Scannell's brokers say that only if there are left over EIS funds, will SR be able to utilise them.

2. OK the offer price is the same as as institutional and existing shareholders, but it is hardly at a fantastic premium and given that the company is due to talk about its future as a US convention in two weeks time, an event which often brings the share price down, it may not be at a premium at all.

3. It strikes us that looking at this deal from the brokers side, they are happy to have SR investors clean up any morsels which may be left. SR investors are not standing side by side with the big boys or even existing shareholders. In fact they might get a better deal if they waited for the price to dip in April. The premium is so small as to make it almost irrelevant.

So at the moment the earth is not moving for us. But it is early days.


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