Wednesday is proving to be a rough day for the Pinnacle Investment Management Group Ltd (ASX: PNI) share price after the company defrosted its stock this morning.
Pinnacle entered a trading halt yesterday as it underwent a $105 million capital raise. The funds were earmarked to go towards a new acquisition.
Unfortunately, the market reacted poorly to the happenings after the company’s stock was released from its freeze.
At the time of writing, the Pinnacle share price is $16.35, 6.57% lower than it was as of Monday’s close.
Let’s take a closer look at this week’s news from the investment management firm.
Pinnacle share price slides on barrage of news
The Pinnacle share price is suffering despite news the company is acquiring a 25% stake in venture capital and private equity company Fire V Capital.
The investment will cost Pinnacle $65 million. A further $10 million is contingent on a successful second fundraising for Five V’s venture capital strategy.
To cover its cost, the fund has raised $105 million through an institutional placement.
The $30 million remaining after the acquisition will help replenish its balance sheet following its 2019 purchase of 25% of Coolabah Capital Investments.
Under the placement, Pinnacle offered institutional investors the option to purchase Pinnacle shares for $16.70 apiece. That was a 4.6% discount on its share price as of Monday’s close. It was also 7.6% less than its 5-day volume-weighted average price.
Simultaneous to the placement, Pinnacle’s director Adrian Whittingham completed a sell-down of 875,000 Pinnacle shares. The holding was worth approximately $14.6 million at the placement price.
The fund is also planning to undergo a share purchase plan. During the share purchase plan, eligible shareholders will be able to purchase up to $30,000 worth of new Pinnacle shares.
Under the share purchase plan, shares will be offered at the placement price or the 5-day volume-weighted average price of Pinnacle shares up to 15 December, whichever is lower. It will open on 30 November.
As The Motley Fool Australia reported yesterday, Pinnacle also provided the market with an update on its funds under management (FUM) during its trading halt.
As of 31 October, Pinnacle was managing $90.9 billion of funds. Its aggregate affiliate FUM are also more than 30% higher than its average FUM for financial year 2021.
Right now, the Pinnacle share price is 130% higher than it was at the start of 2021.
The post Here’s why the Pinnacle (ASX:PNI) share price is falling 6% on Wednesday appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended PINNACLE FPO. The Motley Fool Australia owns shares of and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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