APA rules off institutional leg of $750m raise for its big M&A bet
It’s not often that pipelines owner APA Group offers up discounted stock to investors. But when it does, it sure can pull a crowd.
APA Group boss Adam Watson.
Its $675 million institutional placement – part of a broader $750 million raise to bankroll the acquisition of Alinta’s remote power assets in Western Australia’s Pilbara – had enough demand to get it over the line before lunch. Fund managers were receiving books covered messages by early afternoon.
The purchase of the power assets – for which it faced competition from Morgan Stanley’s infrastructure investing arm – comes less than a year in for APA’s new boss Adam Watson, who took reins in December after serving as the chief financial officer. Watson had Darren Rogers, APA’s group executive for energy solutions, front and centre on Wednesday’s investor calls with him. Sources said another executive, Ross Gersbach, was instrumental in getting the deal done after recently returning from the US.
APA’s brokers, Barrenjoey and Morgan Stanley, would have kept tinkering with the book into the day to make sure the stock trades well come Thursday. Fund managers were told to expect allocations to run into the night. The 8.2 per cent discount to last close was just right to get existing shareholders on board, sources said.
The point is APA offered fundies stock at an 8.2 per cent discount to the last close – and they took it with both hands. It was APA’s first equity raising in more than five years; the last one was done via a $500 million rights issue in early 2018.
Wednesday’s rapid fire bookbuild is an early vote of confidence for APA’s M&A bet. It’s telling shareholders it sees value in going deeper into power generation and is willing to stump up $1.7 billion to do so
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