Here’s why the AUB share price is tumbling 16% today

Man with his hand on his face looking at a falling share price chart on a tablet.Man with his hand on his face looking at a falling share price chart on a tablet.

The AUB Group Ltd (ASX: AUB) share price has returned to trading following the company’s institutional component update.

At the time of writing, shares in the insurance broker network are swapping hands at $18.62, down 16.73%.

AUB shares resume trading

It been a disappointing day for AUB shares, with investors selling their holdings amid the company’s successful equity raise.

In its release, AUB advised it has completed its institutional placement and institutional entitlement offer.

The accelerated pro-rata non-renounceable entitlement offer sees 1 share issued for every 5.2 AUB shares owned. Issued at a price of $19.50 apiece, both the placement and entitlement offer were significantly oversubscribed. The majority of eligible institutional security holders took up their allocated minimum entitlements on the latter.

Approximately 18 million new shares are to be issued under the equity raising, representing 24.1% of the current issued capital.

The newly created shares will be settled on 17 May, and available to trade on the following day.

With the institutional entitlement offer and placement now completed, the retail component will commence on 16 May.

Hoping to raise an additional $47 million, AUB will offer the same terms and ratio of shares to eligible retail shareholders. The Retail Entitlement Offer is expected to close on 27 May.

AUB’s total equity raising (being the placement and entitlement offer) is $350 million.

The company recently entered into a binding agreement with Tysers for a total consideration of around $880 million.

The acquisition will be funded from proceeds of the equity raising, a placement of $176 million (GBP100 million) of AUB shares to the vendor of Tysers, and a new $675 million multi-currency debt facility.

AUB group CEO, Mike Emmett commented:

We are very pleased with the strong support we have received from our institutional shareholders and welcome new investors to AUB as we undertake this important next step in our growth strategy.

Tysers will provide AUB with a direct platform to the Lloyd’s market, assisting AUB to continue our growth while enhancing our value proposition to our brokers and customers.

About the AUB share price

Trading along small and sharp share price movements, AUB shares have fallen by about 6% in the last 12 months. However, in 2022, the company’s share price is down by 25%.

AUB presides a market capitalisation of roughly $1.43 billion, with approximately 74.46 million shares on its books.

The post Here’s why the AUB share price is tumbling 16% today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Austbrokers Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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