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The S&P/ASX 200 Index (ASX: XJO) is having a rather dreadful start to the week this Monday. At the time of writing, the ASX 200 is down 0.87% to 7,284 points.

But many investors love to buy ASX shares on days like today, simply because they can pick up their favourite shares for a relatively cheaper price. With uncertainty seemingly returning to the share market, many investors might also be looking to shares that can be labelled as ‘defensive shares’, companies that are capable of generating cash flows regardless of the economic weather.

So with that in mind, here are 2 defensive ASX 200 shares that brokers rate as ‘buys’ today:

2 defensive ASX 200 shares rated as ‘buys’ this Monday

Coles Group Ltd (ASX: COL)

Coles is one of the largest defensive ASX 200 shares on the share market today. And it doesn’t get too much more defensive than the groceries and other household essentials that Coles sells through its huge network of stores nationwide. We all by now would be familiar with the heightened levels of grocery consumption that COVID outbreaks seem to induce.

Coles has actually not been a great performer of late. This company is still down more than 7.5% year to date in 2021 so far, and is also down 4.5% over the past 12 months. However, one broker who thinks the Coles share price might be an ASX 200 buy today is investment bank, Goldman Sachs. Goldman currently has Coles rated as a ‘buy’, with a 12-month share price target of $19.40 a share.

This implies a potential future upside of more than 13% over the next 12 months (not including any dividend returns either). Goldman likes Coles shares right now due to the company’s Smarter Selling cost-cutting program, as well as its efficiency-driving investments in its supply chains.

Telstra Corporation Ltd (ASX: TLS)

Telstra is our second ASX 200 share to look at today. This telco is also arguably a highly defensive share. It’s difficult to imagine most Australians giving up their phones, internet plans or broadband connections these days, no matter the economic weather. And Telstra is the country’s leading purveyor of all three.

Unlike Coles, the Telstra share price has actually been a very rewarding asset to own in recent months. Telstra shares are currently up almost 25% year to date so far, as well as being up nearly 11% over the past 12 months.

Goldman is also bullish on Telstra, rating the telco as a ‘buy’ with a 12-month share price target of $4.20 a share. This implies a potential future upside of 11.7% for this ASX 200 share, also not including any dividend returns. Goldman reckons Telstra’s recent sale of half of its mobile towers is conducive to future shareholder value. Additionally, Goldman likes Telstra’s “strong earnings outlook, particularly in mobile”.

The post 2 defensive ASX 200 shares that brokers rate as ‘buys’ this Monday appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Telstra Corporation Limited. 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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The Nick Scali Limited (ASX: NCK) share price is the spot of green amongst the sea of red today.

At the time of writing, shares in the household furniture retailer are selling for $11.52 – up 4.39%. The All Ordinaries Index (ASX: XAO), meanwhile, is down 0.95%.

The company comes into focus after it confirmed it was in discussions to buy Plush Sofas. Nick Scali entered a trading pause prior to the announcement.

Let’s take a closer look at today’s news.

Nick Scali wants a new Plush Sofa

In a statement to the ASX, Nick Scali confirmed it was in “non-exclusive discussions” with Greenlit Brands to acquire the Plush Sofas brand.

The Australian newspaper reported before the trading pause that the furniture company would spend up to $100 million on the purchase. Plush generates around $20 million in annual turnover, according to the report.

In its statement, Nick Scali Limited stressed the lack of certainty around the ongoing discussions and said no binding agreement has yet been reached.

It also said if any transaction should proceed, the company would pay for it “with a combination of cash on hand and debt”.

Investors clearly believe the deal would be of value to the company, judging by the Nick Scali share price.

Nick Scali share price snapshot

Over the past 12 months, the Nick Scali share price has increased 75%.

In its half-year financial report, the company declared revenue of $171 million – a record for the company and an increase of 24.4% on the prior corresponding period (pcp).

Earnings before interest, tax, depreciation and amortisation (EBITDA) rocketed 94.2% on the pcp to $60.2 million and underlying net profit after tax (NPAT) was up almost 90% to $40.5 million.

The company paid an interim dividend of 40 cents per share on the results.  Nick Scali management said a surge in demand during the pandemic drove the strong results.

The company paid back half the amount of JobKeeper payments it received on the back of sustained public pressure. The federal government’s wage subsidy program was intended to help businesses that would suffer financially because of the novel coronavirus.

Nick Scali Limited has a market capitalisation of $933 million.

The post Why the Nick Scali (ASX:NCK) share price is going gangbusters appeared first on The Motley Fool Australia.

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• 3 high-yielding ASX dividend shares
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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 no position in any of the stocks mentioned. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

They say that imitation is the sincerest form of flattery . When it comes to investing, imitating the way that billionaires invest might seem like a great way to amass a fortune of your own. In reality, though, that’s a bit more problematic than it might seem at first glance.

Billionaires tend to have both different money needs and access to different money tools than we ordinary folks do. They also tend to have the ability to lose millions of dollars and not even feel it, whereas if you or I lost that much, it would likely be devastating. With that background in mind, here are four reasons you shouldn’t invest like billionaires do.

No. 1: They need less of their money than you do of yours

One of the ironies of the world is that the rich can live more cheaply than ordinary folks can. If the rich live with no debt, they don’t pay debt service costs. If they do have debt, they likely get the best terms and use it as a financial tool, rather than out of necessity. In addition, it’s easier for the rich to afford more efficient & environmentally friendly things like solar panels, electric cars, and high efficiency insulation, windows, and other building materials.

All that adds up to a situation where billionaires not only have more money than the rest of us do, but also one where they need less of what they have in order to cover their absolutely necessary costs. As a result, they can be aggressive with a larger part of their investments than most ordinary folks can, and still wind up OK when things go wrong. We ordinary folk, on the other hand, need a larger portion of our assets socked away in a safer location for the inevitable “life happens” events.

No. 2: They tend to own too much of their employer’s stock

Many billionaires became billionaires because they were the founders of an ultimately successful company or the turnaround expert who saved a struggling business. Much of their wealth is tied up in the stock of the company they founded or run, which basically means their wealth is dependent on the continued success of that business.

As a controlling shareholder or influential leader of the business, their financial fate is largely in their own hands with that setup. If you’re not in such a position, then having too much of your net worth tied up in your employer’s stock can actually end up as one of the biggest financial mistakes you can make. After all, if the company gets into trouble, you can lose both your job and your life savings at the same time.

No. 3: You can diversify in ways they can’t

Having billions of dollars might seem wonderful, but having it largely tied up in a single investment like so many billionaires do can be quite terrifying. That raises a key question of why they don’t just diversify their portfolios. Unfortunately, even if they want to, it’s tough for them to do so, for two key reasons.

First, it causes an image problem. Executives of publicly traded companies need to disclose when they buy or sell shares. When an executive sells a large chunk of shares, it tends to raise very public questions on whether that executive really believes in the future of the company. That tends to keep billionaire CEOs and other executives invested even if they know they really should diversify their holdings.

Second, the taxes they face can be staggering. Assuming most of those billionaires’ riches come from highly appreciated stock, even a small act of diversification can be costly. 1% of a $1 billion nest egg works out to $10 million. If that has a near $0 basis, the billionaire can easily face over $2.3 million in federal taxes. In addition, state and local taxes on top of that could drive the total tax bill above $3 million. Even for a billionaire, paying millions in otherwise avoidable taxes can be a tough pill to swallow.

No. 4: You can invest in faster growing places than they can

Warren Buffett has mentioned that it’s hard to invest in the fastest growing companies once your own portfolio gets large enough. This is because the fastest growing companies tend to be smaller ones. With a huge asset base, you simply can’t buy enough of a small, fast growing company to make a difference to your overall portfolio.

That gives you one major advantage over the billionaires of the world: You can position the growth portion of your portfolio for the potential for higher returns than those biggest investors can. It may not be enough on its own to get you to billionaire status yourself, but compounded growth over decades is a great path to give yourself a strong chance to reach millionaire status.

Invest for your own success

The beauty of investing is that both you and the billionaires of the world have access to the stock market and its ability to create long-term wealth over time. The portfolio balance you’ll have will be different than what they have. They may have more money than the rest of us, but the access we have to faster growth investments and easier diversification gives us the opportunity to do just fine for ourselves.

So even if you shouldn’t invest just like billionaires do, you should still be inspired by their successes to invest for yourself. Over time, the wealth the market can help you build can help you reach for a financially comfortable future.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 4 reasons you shouldn’t invest like billionaires do appeared first on The Motley Fool Australia.

More reading

• Digital Wine (ASX:DW8) share price dumps on acquisition
• Empired (ASX:EPD) share price rockets 59% on takeover news
• Here’s why the Predictive Discovery (ASX:PDI) share price is rocketing 52% higher
• AnteoTech (ASX:ADO) share price lifts as Ellume US sales ramp-up
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Chuck Saletta 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Digital Wine Ventures Ltd (ASX: DW8) share price has dumped more than 14% after emerging from a trading halt.

Shares in the company were placed in a halt late last week, having last traded at 9.1 cents. After being reinstated to the market, shares in Digital Wines dumped more than 14%, hitting an intra-day low of 7.7 cents.

At the time of writing, the Digital Wines share price has recovered slightly trading at 8.3 cents.

Investors were triggered after the company announced a strategic acquisition earlier today.

Shares in Digital Wines tank on strategic acquisition

Digital Wines announced to the market that the company intended to undertake a strategic acquisition of Parton Wine Group.

Parton Wine was established 14 years ago with more than 23,000 square metres of warehousing around Australia. The company is one of Australia’s largest specialist wine and beverage logistics with over 200 unique suppliers.

In an investor presentation, Digital Wine highlighted that the acquisition would bolster its WINEDEPOT business. According to Digital Wine, the acquisition will provide a lift in key performance metrics and support the company’s growth strategy.

As part of the acquisition, Parton Founder Richard Raddon will join WINEDEPOT’s senior executive team as General Manager of logistics.

Digital Wine CEO, Dean Taylor, commented on the acquisition;

“Along with an immediate lift in key metrics, the acquisition provides us with another 225 customers that can be leveraged to drive further growth across our platform. The scale of the merged operation, overlaid with our investment in state-of-the-art technology, will undoubtedly help position WINEDEPOT as the market leading supply chain solution, focused on supporting the eCommerce shift in the wine industry.”.

Digital Wine was able to raise $7,500,000 via a share placement at 6.5 cents. The capital raising was constructed as a two-tranche placement, with the funds used to fund the acquisition of Parton and support the company’s growth strategy.

More on Digital Wine

Digital Wine is an online beverage supplier that provides end-to-end supply chain solutions for wine producers, distributors, importers and retailers. The company’s WINEDEPOT business operates as a cloud-based software-as-a-service. The WINEDEPOT technology platform removes inefficiencies in supply chains and empowers direct-to-market sales.

In addition to details on the acquisition, Digital Wine also provided an update on its WINEDEPOT business.

The company highlighted that WINEDEPOT has completed the 2nd stage of its rollout in Melbourne. In addition, WINEDEPOT Logistics shipped record 27,000 cases in June. Digital Wine also noted that WINEDEPOT signed up 25 new suppliers and expects WINEDEPOT DIRECT to go live in July.

The post Digital Wine (ASX:DW8) share price dumps on acquisition appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Nikhil Gangaram 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 no position in any of the stocks mentioned. 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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The Empired Ltd (ASX: EPD) share price has jumped firmly into the green today as French company Capgemini announced it has agreed to pay $233 million for the ASX-listed name.

Let’s take a walk through this morning’s events in a bit closer detail.

Quick recap on Empired

Empired is an IT services provider that has expertise in a raft of IT-specific domains, such as cloud services and data insights.

The company provides its services to a wide range of industries. It has two segments that operate in Australia and New Zealand.

At the time of writing, Empired has a market capitalisation of $209 million.

Capgemini’s proposal

French multinational Capgemini announced this morning it proposed to buy 100% of Empired shares for $233 million.

The $1.35 per share bid represents a ~65% premium to Empired’s closing share price on Friday.

Capgemini’s proposal also values Empired at a “normalised EV/EBIT” multiple of 16.7 times for FY 2021.

Empired’s board unanimously recommended that shareholders vote in favour of the proposal, claiming the scheme “is in the best interest of Empired shareholders”.

Speaking on the proposal, Empired chair Tom Stianos stated:

After considering all the relevant factors, we believe this is a compelling offer for Empired shareholders. It provides shareholders with the opportunity to realise immediate value for their shareholding, at a significant premium to current trading levels.

Chief executive Russel Baskerville also weighed in:

If implemented, the Scheme will provide outstanding career opportunties for our people and have a positive impact for existing and prospective clients by providing them with access to the significant resources, service capabilities and international experience of Capgemini.

Baskerville intends to vote “all shares within his control” – around 5.8% of shares on issue – in favour of the proposal.

The market seems to have favoured the announcement, as Empired shares are now exchanging hands at $1.31, a 60% jump on the day.

Empired shareholders are expected to vote on the proposal in early October.

Empired share price snapshot

The Empired share price has posted a return of 92% since January 1. This has extended the previous 12 months’ return of 273% into the green.

Both returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of ~21% over the past year.

The post Empired (ASX:EPD) share price rockets 59% on takeover news appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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 no position in any of the stocks mentioned. 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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The Predictive Discovery Ltd (ASX: PDI) share price is rocketing higher in early afternoon trade, up 52%.

Below, we take a look at the ASX gold share’s latest exploration announcement.

What new results did the gold explorer report?

Predictive Discovery’s share price is soaring after the company reported promising new gold results at its Bankan Project, in Guinea.

Four diamond drill holes – totalling 1,033 metres – intersected “high to bonanza gold grades over broad widths”. The ASX gold explorer said that both gold grade and consistency increased with depth.

Among the top results:

• 7m @ 11.7g/t Au from 301m, including:
  • 0m @ 31.9g/t Au from 313m (including 7.0m @ 50.3g/t Au)
• 6m @ 5.7g/t Au from 237m, including:
  • 40m @ 7.3g/t Au from 239m

Commenting on the latest results, Predictive Discovery’s managing director, Paul Roberts said:

Following up our recent, previous best-ever intercept of 44 metres at 8g/t Au with a significantly broader and higher-grade gold intercept 100 metres to its north is simply remarkable… [W]e can see a clear progression of both increasing grade and grade consistency as we drill deeper.

Roberts said the latest results give the company “a high-grade gold zone which is 100-200 metres long, extends down-dip for over 250 metres and, very promisingly, is open at depth”.

He added:

Our immediate task is to define the new high-grade zone by infill and extension drilling. To this end, the multi-purpose drill rig currently on site will be focused on further defining and extending this zone over the next few months.

Predictive Discovery said it’s working with a Senegal-based drill contractor to get its truck mounted air core rig on to the Bankan Project for the rainy season. That rig will test the newly defined gold targets.

Predictive Discovery share price snapshot

Predictive Discovery’s share price is up 82% over the past 12 months. By comparison the All Ordinaries Index (ASX: XAO) has gained 24% over that same time.

Year-to-date, the Predictive Discovery share price has been on a tear, up 142% with today’s intraday gains factored in.

The post Here’s why the Predictive Discovery (ASX:PDI) share price is rocketing 52% higher appeared first on The Motley Fool Australia.

More reading

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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 no position in any of the stocks mentioned. 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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The AnteoTech Ltd (ASX: ADO) share price is bouncing around today with above-average trading volume. This comes as Ellume secures further approvals from the United States Food and Drug Administration (FDA) for its COVID-19 rapid antigen home test.

At the time of writing, the AnteoTech share price is up 4.17% to 25 cents. Meanwhile, the trading volume is around 4.3 million shares. This represents around 91% of the company’s average volume for a whole month.

Let’s look at the latest news and why AnteoTech shares are returning a positive reading today.

More tests to fly out the door

For those unaware, AnteoTech is connected to Ellume by providing its ‘AnteoBind’ technology for Ellume’s at-home tests.

According to recent reports, Brisbane-based Ellume is ramping up its rollout of the tests across the United States. This follows the local company receiving approval from the FDA to sell COVID tests to point-of-care providers. Such providers include doctors, pharmacists, and commercial venues.

While millions of at-home COVID tests are flying off the shelves, Australia can’t say the same. Due to Australian legislation, over-the-counter test kits are currently banned locally.

Additionally, in an interview with The Australian Financial Review, Ellume founder and CEO Mr Sean Parsons said:

Right now, the TGA [Therapeutic Goods Administration] are not able to review a submission we make for a home COVID test because there is a piece of legislation that is prohibiting them. Their hands are tied. The law was written when pandemics weren’t really imagined and they wanted to force people to record how many of those illnesses [went] through the health system. I don’t think it really makes sense now

The statement is timely given the current situation faced by the New South Wales Government. A further 98 local COVID-19 cases were recorded by the state overnight.

ASX-listed AnteoTech rides the Ellume buzz

The Anteotech share price has had a cracking 12 months, with shares gaining around 650% over the period. Incidentally, AnteoTech is possibly benefitting from the fact that Ellume is not a publically listed company. With Ellume being an AnteoTech customer, investors might consider the ASX-listed company to be the next best thing.

Finally, the AnteoTech share price was the best performing ASX-listed healthcare share in FY21. The company now holds a market capitalisation of around $478.5 million.

The post AnteoTech (ASX:ADO) share price lifts as Ellume US sales ramp-up appeared first on The Motley Fool Australia.

More reading

• The 5 best ASX shares of FY21 revealed
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• These 3 ASX biotech shares are all up at least 120% in a year

Motley Fool contributor Mitchell Lawler 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 no position in any of the stocks mentioned. 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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In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a disappointing decline. At the time of writing, the benchmark index is down 0.95% to 7,279.3 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are pushing higher:

CSL Limited (ASX: CSL)

The CSL share price is up 1.5% to $282.00. This morning analysts at Ord Minnett retained their hold rating on the biotherapeutics company’s shares but lifted their price target by 5.2% to $280.00. The broker is confident the company’s plasma collections will recover by the end of the year, albeit with higher collection prices.

Humm Group Ltd (ASX: HUM)

The Humm share price is up over 6% to $1.04 after releasing a business update. According to the release, the financial services company had a strong finish to the financial year. As a result, it expects to report a FY 2021 cash net profit after tax of $68.4 million. This will be an increase of 121.1% on the prior corresponding period.

IntelliHR Ltd (ASX: IHR)

The IntelliHR share price has jumped 11% to 24.5 following the release of its fourth quarter update. According to the release, the HR technology company finished the financial year in a very positive fashion, reporting $1 million in new contracted business. This was a 236% increase on the same period in FY 2020. This ultimately underpinned the doubling of its annualised recurring revenue in FY 2021.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan share price is up 2% to $9.50. Investors have been buying the lithium explorer’s shares on Monday after it announced its first offtake agreement. According to the release, Vulcan has signed an initial five-year agreement starting in 2025 with LG Energy Solution for battery grade lithium hydroxide. LG Energy Solution is the largest producer of lithium-ion batteries for electric vehicles in the world. The agreement is for 5,000 metric tonnes in the first year and then 10,000 tonnes each year thereafter.

The post Why CSL, Humm, IntelliHR, & Vulcan shares are pushing higher appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 CSL Ltd. The Motley Fool Australia has recommended Humm Group Limited. 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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The Infinity Lithium Corporation Ltd (ASX: INF) share price plummeted in morning trade. The fall came after the company announced its appeal against the cancellation of the San José Lithium Project’s investigation permit has been unsuccessful.

Right now, Infinity Lithium shares are 19.64% lower than their previous close – swapping hands for 11.3 cents.

Let’s take a closer look at the news driving the Infinity Lithium share price down today.

Quick refresher on San José

Located in Spain, San José is one of Europe’s largest lithium deposits.

San José is a joint venture project between Infinity Lithium and Valoriza Mineria S.A..

Infinity Lithium holds 75% of the project.

Why is the Infinity Lithium share price falling today?

The Infinity Lithium share price is plunging lower today after it was unsuccessful in its appeal against the cancellation of San José’s Investigation Permit Valdeflórez (PIV).

The permit was cancelled in May by the General Directorate of Industry, Energy and Mines of the Regional Government of Extremadura (Junta) due to concerns the project is too close to a township.

According to Infinity Lithium, it was illegal for Junta to cancel San José’s PIV.

The company has employed lawyers and will take the decision to an administrative-contentious appeal process.

Additionally, the company’s Investigation Permit Ampliacion Valdeflorez (PIAV) has been appealed against by a non-government organisation. Fortunately for Infinity Lithium, the appeal has been dismissed.

Commentary from management

Infinity Lithium’s CEO and managing director Ryan Parkin commented on the company’s plans to fight the PIV’s cancellation:

We reiterate our commitment to absolute legality in the process of resolving the multiple administrative inconsistencies and applications of judgements by the Junta. The Junta, for its part, has shown arbitrary discretion and contradictions between the original grant of the Investigation Permit and its recent change of position. The administrative and legal resolution in the face of the same facts cannot change its criteria to suit political endeavours and the company is confident of a positive resolution under the rule of Spanish law.

Infinity Lithium share price snapshot

Today’s fall has added to the woes of the Infinity Lithium share price.

Right now, Infinity shares are 27% lower than at the beginning of the year. However, they have gained 31% since this time last year.

The company has a market capitalisation of around $45 million, with approximately 402 million shares outstanding.

The post The Infinity Lithium (ASX:INF) share price fell 20% today appeared first on The Motley Fool Australia.

More reading

• Why the Infinity Lithium (ASX:INF) share price is skyrocketing 17% today
• Here’s why the Infinity share price is powering 6% higher today

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. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The SelfWealth Ltd (ASX: SWF) share price is having a woeful day upon its return on the ASX today. This comes after the online brokerage company announced an update to its capital raising efforts.

At the time of writing, SelfWealth shares are down a sizeable 8.84% to 39 cents. Interestingly, the All Ordinaries Index (ASX: XAO) was up 0.2% to 7,630 points earlier in the day, before currently falling to 0.97%.

What’s dragging SelfWealth shares lower?

Investors are scrambling to sell SelfWealth shares as the company prepares to dilute existing shareholder value.

According to its release, SelfWealth advised it has received strong support to raise $10 million through a share placement. The offer was presented to both new and existing investors at an issue price of 39 cents per share. This equates to roughly 25.6 million new ordinary shares being added to the company’s registry.

Unsurprisingly, the current SelfWealth share price is now at the same price as offered by the company on 14 July. However, today the company’s shares dipped as low as 37.5 cents, 4% below the issue price of the placement.

SelfWealth will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to an additional 15% of its total shares to be issued without shareholder approval. The company will use an extension to the listing rule (7.1A) to issue the remaining shares (20.2 million).

The funds will be used to accelerate SelfWealth’s growth strategy in delivering diversified revenue streams and increasing market share. This includes expanding product offerings as well as investing in user experience and high-demand features. Furthermore, the company is seeking to implement a robust data and analytics strategy, and increasing headcount to support mobilisation.

SelfWealth also intends to utilise existing cash reserves of around $3 million to pursue its planned growth initiatives.

In addition to the placement, the company will offer a Share Purchase Plan (SPP) to raise an additional $2 million. The SPP will be offered to retail investors at the same price as the placement. The closing date of the SPP is on 6 August 2021.

Management commentary

SelfWealth CEO Cath Whitaker commented on the placement, saying:

We successfully completed the $10 million equity raise with the transaction oversubscribed. We are pleased with the level of engagement from our existing shareholder base along with welcoming new high-quality investors onto the register.

We are excited to be entering this new stage of growth, with the proceeds from the Placement allowing us to accelerate our strategy and continue to improve on the user experience for our members, delivering value and fairness to Australian investors

The SelfWealth share price has fallen more than 26% over the past 12 months and is down roughly 29% year-to-date.

The post SelfWealth (ASX:SWF) share price sinks 9% on capital raising efforts appeared first on The Motley Fool Australia.

More reading

• SelfWealth (ASX:SWF) share price on watch next week after $10 million capital raising
• Why is the SelfWealth (ASX:SWF) share price frozen today?
• SelfWealth (ASX:SWF) share price dives 11% after fourth quarter results

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 no position in any of the stocks mentioned. 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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