SET secures strong demand for $91.97 million income strategy raise

Placement reaches maximum capacity

Solaris Australian Equity Income Plus Limited (ASX:SET) has filled the $28.5 million placement announced two days ago, securing commitments for 14,129,493 new shares at $2.02 each. The stronger signal is elsewhere in the bookbuild: aggregate demand across the placement and the associated shortfall process exceeded the full $91.97 million capital raising.

The result gives Solaris a credible path to completing the entire raise, but not yet a completed transaction. The entitlement offer and shortfall offer are not underwritten, and allocations remain subject to the board’s discretion. Final proceeds will depend on shareholder participation and the allocation of any shares not taken up.

Entitlement offer opens to existing holders

The company is proceeding with a 1-for-3 non-renounceable entitlement offer targeting up to $63.4 million at the same $2.02 issue price. Eligible shareholders will be able to apply for one new share for every three held at 7pm Sydney time on 16 November, with the offer expected to open on 19 November and close on 4 December.

The structure means entitlements cannot be sold or otherwise transferred if shareholders choose not to participate. Investors who take up their full entitlement may also apply for additional shares through the oversubscription facility, although the board can scale back those applications. Each director intends to take up their full entitlement.

Issue price tracks NTA while demand builds

The $2.02 price is broadly aligned with Solaris’s estimated pre-tax net tangible asset backing of $2.025 a share at 6 November, after adjusting for the 0.7 cent November fully franked dividend. It also represents a 5.2% discount to the $2.13 closing price recorded before the original capital raising announcement.

That pricing was already central to the $91.97 million raise proposal, which was aimed at enlarging the income portfolio ahead of the February and March dividend season. Solaris Investment Management chief investment officer Michael Bell said the portfolio had exceeded its income and total return objectives since listing and that the additional capital would be put to work ahead of that period. Those comments are management’s assessment, rather than a guarantee of future portfolio performance.

Shortfall demand removes one immediate funding question

Any shares left after the entitlement offer and oversubscription facility are expected to be placed with professional and sophisticated investors who participated in the shortfall bookbuild. The company says those investors have provided firm commitments for shares that become available, suggesting the shortfall may be absorbed at the offer price if the bookbuild commitments hold.

Trading resumes on 11 November, with the shares moving to an ex-entitlement basis from 13 November. The entitlement and shortfall results are expected on 7 December, followed by settlement on 11 December and normal trading in the new shares from 14 December. The next hard test is therefore not demand in the institutional bookbuild, but how existing shareholders respond to a non-renounceable offer and how the enlarged share base affects future NTA and dividend metrics.