Where next as Bapcor raises $180 million in fresh capital?

$180 million insto placement gets warm reception

Car parts retailer Bapcor has won an endorsement from shareholders after completing the institutional component of a $210 million capital raise.

Bapcor successfully raised $180 million from institutional investors via the issuance of approximately 40.9 million shares at $4.40 per share. The share price finished Friday’s session up 1.7% to $4.89 per share.

This was well ahead of the placement price and bettered the 1.3% jump on the benchmark ASX 200. Bapcor shares hit an intraday high of $5.26 per share, before profit takers took over late in the session.

The placement represents approximately 14.3% of the company’s existing shares on issue. Bapcor will also conduct a share purchase plan of up to A$30 million for retail shareholders.

Where next: the 5-year plan

Australian car sales were already struggling before the coronavirus hit. Subsequent social distancing policies has pulled millions of cars off the road. Overall, the retailer is looking to reduce its net debt position and gearing to ride out the crisis.

‘Bapcor is seeking to maintain increased levels of cash on balance sheet to provide liquidity and flexibility in the current environment,’ the company said in a statement to the ASX on Friday.

Bapcor chief executive Darryl Abotomey said he was pleased with the support from the shareholder base.

‘We see the success of the placement as a clear endorsement of Bapcor’s strong and resilient business and our strengthened position to continue to execute our 5-year strategy and any other growth initiatives that may arise,’ Abotomey said.

Eligible shareholders will be able to purchase up to $30,000 worth of stock as part of the share purchase plan, which Bapcor can increase or scale back depending on demand.

Shareholders will either get a 2% discount to the five-day volume weighted price, or the volume weighed average price, on the closing day of the share purchase plan. Whichever is the lesser. The scheme closes on 15 May.

Bapcor share price performance at a glance

Institutional shareholders received a healthy premium to increase their exposure to the business. The placement price of $4.40 per share represents an 8.9% discount on Bapcor’s last traded price before the cap raise was announced.

Though the stock has fallen out of favour with the market in recent months, looking back at the company’s share price over the last five years, Bapcor has proved to be a relatively stable stock for investors.

Indeed, from April 2015 to December 2019, the Bapcor share price rose over 100%. In the last six months however, it has lost around a third of its value.

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