Tag: Motley Fool

With inflation on the horizon, S&P/ASX 200 Index (ASX: XJO) mining and banking shares should be in your sights. Not to mention your share portfolio.

That’s because ASX 200 financial shares and ASX 200 resource shares tend to outperform technology and other growth shares during inflationary periods, when central banks may be forced to raise interest rates sooner and higher than many expect.

Now inflation may not be a concern today. And according to placating words from the world’s leading central bankers (we’re looking at you Jerome Powell, Philip Lowe and Christine Lagarde) they’re in no hurry to lift their official cash rates even if inflation does return to within target levels.

Stay calm, investors have been told. Rates will, almost certainly, remain at rock bottom levels until at least 2024.

But long-term government bond yields have told a potentially different story. With US 10-year Treasury notes recently spiking to 1.62%, the highest level since before the global pandemic, the bond market is clearly getting a tad jittery about what was for so long lamented as “stubbornly absent” inflation.

And share market investors would do well to take note.

The case for ASX 200 mining and banking shares in an inflationary environment

According to Perennial Value Management portfolio manager Dan Bosscher, inflation looks to be coming, though it’s yet to show up in the economic data.

Bosscher says (as quoted by the Australian Financial Review):

Inflation is the topic of the day – whether the inflationary outlook is going to be real or not. The five year/five year breakeven has been going up for six months and there’s been no inflation prints yet. The market is saying they can see it but it’s not in the economic data yet. If I didn’t follow that, I wouldn’t know that maybe I should be long commodities because they work well in an inflationary environment.

Two of the ASX 200 shares that Bosscher holds in a portfolio of only 20 companies are mining giant BHP Group Ltd (ASX: BHP) and banking behemoth Australia and New Zealand Banking Group Ltd (ASX: ANZ).

“They fit with my view that the reflation story is real. I don’t think that we are going to have rampant inflation but I think it’s pretty clear that the market is pointing in that direction,” Bosscher said.

BHP share price and ANZ share price snapshots

Up 0.5% in late afternoon trading today, ANZ shares have gained an impressive 101.2% over the past 12 months. That compares to a 48.7% gain on the ASX 200. Year-to-date the ANZ share price is up 23.1%. ANZ pays an annual dividend yield of 2.1%, fully franked.

BHP shares are slipping today, down 0.89% at the time of writing. Over the past 12 months, the BHP share price is up 64% with a gain of 3.3% so far in 2021. BHP pays an annual dividend yield of 4.6%, fully franked.

More reading

• ASX 200 climbs, Crown soars, Mineral Resources drops
• ASX 200 up 0.35%: Crowns surges, ANZ & CBA settle class actions
• ANZ (ASX:ANZ) share price in focus after settling US class action
• Why the Commonwealth Bank (ASX: CBA) share price is on watch today
• ASX 200 Weekly Wrap: Inflation fears hold ASX down

Motley Fool contributor Bernd Struben 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.

The post Two ASX 200 banking and mining shares to own as inflation lurks appeared first on The Motley Fool Australia.

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Fortescue Metals Group Limited (ASX: FMG) shares did not have a pleasant day today. At the close of trading, the Fortescue share price has fallen 4.25% to $19.16 a share.

It was worse earlier in the day though. At around midday, Fortescue shares were down more than 5.5% when a low of $18.87 a share was hit.

Today’s move represents the latest chapter in what has been a rapid wind change for Fortescue. It was less than a month ago that this company was commanding a share price of $25.24 a share, meaning Fortescue has dropped 24% since 25 February.

As my Fool colleague reported this morning, it is concern over a falling iron ore price that seems to be weighing Fortescue down.

But let’s look at the bigger picture for a moment. The miner’s performance over the past few years has in some ways masked the dangers that are inherent with investing in a company like Fortescue.

Yes, the company is up an extraordinary 347% since the start of 2019. But investors would probably do well to remember that Fortescue shares also lost roughly 30% of their value over the preceding 9 or so years.

Iron is a fickle master, even for Fortescue

Headed by one of Australia’s most successful business operators in Andrew Forrest, Fortescue is evidently an extremely well-run company. However, it is also bound to the fact that is a resource extractor at the end of the day.

Fortescue’s fortunes are forever entwined with the price of iron ore. It’s this fact that can make it a potentially dangerous company to invest in if you are unaware of these pitfalls.

Companies outside the resource sector are in far more control of their own destiny. Most companies can decide what prices to charge for their products or can differentiate what they sell in other ways. This is not the case with a miner like Fortescue.

Fortescue share price ups and downs

It can only sell its product, which is essentially the same as what every other iron or miner on the planet produces, for the prevailing market price. This is great in times when iron ore is rising. But it can be terrible (and capital destructive) if iron falls into a bear market.

For anyone who bought Fortescue shares at their mid-2008 peak had to wait until January last year for their investment to return to the share price they bought at. That’s not a desirable scenario to find oneself in. But that’s often the risk that is there when investing in a miner.

So make sure you keep all of that in mind if you’re thinking about investing in iron ore mining shares. Not knowing the ins and outs of a miner, in particular, can be very dangerous indeed.

More reading

• ASX 200 climbs, Crown soars, Mineral Resources drops
• Leading brokers name 3 ASX shares to buy today
• Why Fortescue, Freedom Foods, QBE, & Singular Health are sinking
• Why the Fortescue (ASX:FMG) share price is sinking 5% today
• ASX 200 up 0.35%: Crowns surges, ANZ & CBA settle class actions

Motley Fool contributor Sebastian Bowen 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 Whitehaven Coal Ltd (ASX: WHC) share price is up 3.54% today and 12.50% since 1 March, flying in the face of the Chinese coal ban that threatened to decimate the Australian industry.

Whitehaven is Australia’s largest independent coal producer and operates four mines in northern NSW alone. The company is exposed to fluctuations in coking coal prices, which recently increased by US$1.70 per tonne to US$130 per tonne due to increasing Chinese demand.

However, Whitehaven doesn’t have any direct exposure to China and has largely benefitted from increasing industrial demand driving up fuel prices.

The miner dropped 30% of its 2019 revenue in 2020, but since the company released its half-year results in February, the Whitehaven share price has been a steady climber, rising from $1.53 on 22 February 2021 to $1.75 today. 

It’s still a very long way from Whitehaven’s five-year share price high, when it topped $5.60 per share in July 2018. But on current prices, Whitehaven shares offer a dividend yield of 8.4%.

Differing coal export dynamics

One of the major beneficiaries of the Chinese ban on Australian coal has been the US, which experienced a 748% increase in demand for its coal in the fourth quarter of 2020. The US is the only nation easily equipped to rival Australia’s range of quality coal exports.

This is while other Australian industries have ultimately continued to immensely benefit from Chinese demand, with iron ore the leading light. This is leading to questions over whether China will maintain its ban on Australian coal exports, with some suggesting it may step back sanctions late this year.

Whitehaven share price escapes unfortunate coincidence

On a lighter note, Whitehaven Coal’s bumper share price shows it has avoided being caught up in a coincidentally named global controversy involving plans for a new coal mine near Whitehaven in England.

A British coal producer, West Cumbria Mining, had been approved to build a deep coal mine in England’s Cumbria region before the decision drew global backlash.

Prominent climate activist Greta Thunberg and Greenpeace called for the decision to be reversed and many in the Cumbrian community spoke out against the plan. The UK government passed legislation in 2019 requiring the country to reach net-zero emissions by 1990 levels by the year 2050.

That’s why you may have been hearing ‘Whitehaven Coal’ in global headlines, but it has nothing to do with the ASX company.

More reading

• ASX 200 Weekly Wrap: ASX finishes higher, despite tech selloff
• These were the best performing ASX 200 shares last week

Motley Fool contributor Lucas Radbourne-Pugh 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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If you don’t have sufficient funds to build a truly diverse portfolio, a quick way to add some diversity is with exchange traded funds (ETFs). Through just a single investment, ETFs give investors exposure to whole indices, industries, and even themes.

There are a large number of ETFs for investors to choose from, but three that could be worth considering are listed below. Here’s what you need to know:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The BetaShares Asia Technology Tigers ETF could be a great option for investors. This ETF gives investors exposure to a number of exciting tech shares in the Asian market. Among its holdings are the likes of ecommerce giant Alibaba, search engine company Baidu, and WeChat owner Tencent. With these companies revolutionising the lives of billions of people in the region, they look well-positioned for growth over the next decade and beyond.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another ETF to consider is the BetaShares NASDAQ 100 ETF. This extremely popular ETF provides investors with exposure to the 100 largest non-financial shares on the famous NASDAQ index. This means investors will be buying a slice of tech giants such as Amazon, Apple, Facebook, Microsoft, Netflix and Google parent, Alphabet. Given how these companies have the potential to grow at a quicker rate than the global economy over the next decade, this could lead to the BetaShares NASDAQ 100 ETF providing stronger returns than the ASX 200.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

A final ETF to consider is the VanEck Vectors Morningstar Wide Moat ETF. This ETF gives investors exposure to a diversified portfolio of fairly valued companies with sustainable competitive advantages. At present, there are 49 stocks in its portfolio. This includes Amazon, Bank of America, Berkshire Hathaway, Intel, McDonalds, and Microsoft. Legendary investor Warren Buffett is a huge fan of companies with moats. So, if you’re aiming to invest like he does, this ETF could help you.

More reading

• 3 five-star ASX shares to buy in March
• 2 top ETFs to buy for growth
• 3 unstoppable ASX shares that keep growing
• 2 great ASX growth shares to buy
• 3 reasons to buy the BetaShares Asia Technology Tigers ETF (ASX:ASIA)

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and VanEck Vectors Morningstar Wide Moat ETF. 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 S&P/ASX 200 Index (ASX: XJO) went up by 0.7% to 6,753 points today.

A takeover offer and the iron ore sector featured in the headlines.

Here are some of the highlights from the ASX today:

Crown Resorts Ltd (ASX: CWN)

The Crown Resorts share price soared today after confirming that it had received a hefty takeover offer from Blackstone.

The ASX 200 casino operator revealed that yesterday it received an unsolicited, non-binding and indicative proposal from a company on behalf of funds managed and advised by The Blackstone Group and its affiliates to buy the whole of the Crown business at a price of $11.85 cash per share. The purchase price would be reduced by any dividends paid.

This indicative price of $11.85 cash per share represented a premium of 19% to the volume-weighted average price of Crown shares since the release of the FY21 half-year result.

At this stage, the offer is still subject to a number of conditions including due diligence and arranging debt finance.

Blackstone currently has a shareholding of 9.99% in Crown which it acquired from Melco Resorts & Entertainment at $8.15 per share in April 2020.

The Crown board hasn’t yet formed a view about this offer, but it will now make an assessment of the proposal with the help of financial adviser UBS and legal adviser Allens.

Freedom Foods Group Ltd (ASX: FNP)

Freedom Foods has crashed 82% after coming back to the market after its long-term suspension. In early trading the share price dropped to just $0.20.

Last week the company announced a recapitalisation plan of up to $265 million to continue its turnaround so that it could substantially repay its bank debt which would provide a flexible capital structure.

The offer comprises an offer of unlisted, subordinated secured convertible notes to eligible wholesale investors of up to $130 million, with priority given to eligible existing shareholders, and a $200 million commitment to subscribe for notes secured from its majority shareholder, Arrovest, the investment vehicle of the Perich family.

Senior lenders National Australia Bank Ltd (ASX: NAB) and HSBC will provide a new 2-year senior secured revolver facility to the company, along with a 2-year term debt facility for up to $50 million, depending on the total note proceeds raises.

All shareholders, excluding Arrovest, will get the chance to apply for ASX-listed options on a pro-rata basis.

Iron ore miner movements

Iron ore resource businesses were in the headlines today.

One of the biggest movers in the ASX 200 was Fortescue Metals Group Ltd (ASX: FMG) which fell 4.3%. The BHP Group Ltd (ASX: BHP) share price fell 1.1% and the Rio Tinto Limited (ASX: RIO) share price fell 1.5%.

Mineral Resources Limited (ASX: MIN) saw a share price fall of around 4%. It told investors today that it had delivered its first iron ore production from the Wonmunna iron ore mine in the Pilbara region, Western Australia. This was achieved less than five months after breaking ground, which was in line with that company’s guidance.

Mineral Resources expects the mine to ramp up to the approved 5 million tonnes per annum (mtpa) run rate in the quarter ending 30 June 2021. There is the potential to expand Wonmunna’s output to 10mtpa after the successful grant of additional approvals for little additional capital cost.

Chris Ellison, Mineral Resources managing director, said:

Wonmunna’s rapid and safe development is testimony to the MRL team’s ability to deliver what others thought impossible. It is the innovative design of our NextGen crushing plants and the agility of our people who make this happen.

More reading

• Mineral Resources (ASX:MIN) share price falling despite good news
• Leading brokers name 3 ASX shares to buy today
• Top broker issues buy alert on Santos (ASX:STO) and these ASX energy shares
• Why Fortescue, Freedom Foods, QBE, & Singular Health are sinking
• Why the Fortescue (ASX:FMG) share price is sinking 5% today

Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia has recommended Crown Resorts Limited and Freedom Foods 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 Pure Hydrogen Corporation Ltd (ASX: PH2) share price was sinking today following the company’s completed placement. By the market’s close, the oil and gas exploration company’s shares were trading down 9.52% to 28.5 cents.

What’s lowering the Pure Hydrogen share price?

Investors have been dumping the Pure Hydrogen share price after an impending share dilution from the company.

According to its release, Pure Hydrogen has raised $9.4 million before costs through a placement to sophisticated and institutional investors. The company will issue 32,430,346 CHESS depositary interests over fully-paid ordinary shares (CDIs) for a price of 29 cents apiece.

Attached to the offer will be half an option available for each CDI subscribed. Each whole option will be unquoted and exercisable into one fully-paid ordinary share at a price of 45 cents up until 30 March 2023.

The company stated that the placement falls under listing rule 7.1, which allows a further 15% of its shares to be issued without shareholder approval.

The proceeds of the placement will be allocated to progressing the company’s growth strategy, namely flow testing of the Venus Pilot well. This is expected to occur within the next three months. In addition, Pure Hydrogen will seek to fund its ongoing operations and international projects.

Management commentary

Pure Hydrogen managing director Scott Brown commented:

Pure is now very well-funded to execute its business plan particularly around our well-advanced activities in building a large hydrogen business that establishes the Company as a meaningful player in the hydrogen economy, a sector that is attracting considerable investment. Whilst we are pleased with the progress to date, these new funds raised give us much greater flexibility to grow our hydrogen operations more aggressively.

As well, our CSG operations in the Surat basin are advancing well and could be a significant value catalyst for our company in their own right. The three-month flow testing operations [are] commencing soon and we expect a steady stream of updates once this work stream commences.

About the Pure Hydrogen share price

The Pure Hydrogen share price has gained 470% in the past twelve months and is up by around 217% year to date. The company’s shares reached a multi-year high of 44 cents this month, before backtracking since.

Based on valuation grounds, Pure Hydrogen commands a market capitalisation of around $80 million, with roughly 277 million shares outstanding.

More reading

• Real Energy (ASX:RLE) share price rockets 27% on hydrogen merger

Motley Fool contributor Aaron Teboneras 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 Ampol Ltd (ASX: ALD) share price is soaring today after its chair more than doubled his personal investment in the company. The transport fuel company’s shares are up 6.02%, trading at $24.30 near the market close today.

Let’s look further into the share purchase which has sent the Ampol share price flying.

The chairman’s investment

In today’s announcement, Ampol advised its chair Steven Gregg purchased another 10,000 shares in the company after the market closed on Friday. The purchase has boosted his holding of Ampol shares to 16,000.

Mr Gregg must have believed the company’s share price on Friday was a good deal. He paid around $23.61 per share, investing more than $236,000 in total.

The on-market trade was announced after the close on Friday, making today the first day investors could follow the chair’s lead.

Many investors believe company insiders who show they have faith in their business by personally investing to be a good sign of a company’s future. This has certainly proven to be the case for Ampol today.

Other Ampol board member’s recent investments 

The Ampol chair’s new investment comes nearly a month after the company notified the ASX of 4 Ampol board members’ personal investments in the company’s shares. 

On 24 February, 3 board members invested in Ampol shares. 

• Mark Chellew purchased 5,500 shares, investing $142,010 ($25.82 per share).
• Micheal Ihlein purchased 7,720 shares, investing $200,649.57 ($25.99 per share).
• Gary Smith purchased 2,150 shares, investing $55,857 ($25.98 per share). 

The following day,

• Penelope Winn purchased 1,550 shares, investing $40,021 ($25.82 per share).

Ampol share price snapshot

It’s clear which board member managed to get the best bargain for the company’s shares. At its current price of $24.30, only Mr Greg is receiving a return on his investment so far.

The Ampol share price is up 27.9% over the past 12 months but down 13.95% year to date.

Ampol has a market capitalisation of $5.46 billion, with approximately 238 million shares outstanding.  

More reading

• ASX energy shares are booming as OPEC cuts production
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brooke Cooper 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 Bitcoin (CRYPTO: BTC) price stands at US$56,528 (AU$73,413) at the time of writing. That’s down 3.4% over the past 24 hours but still up a tidy 94% so far in 2021, according to Bitcoin price data from CoinDesk.

That data also tells me US$55 billion worth of Bitcoin has been traded during the last 24 hours. With a market cap of US$1.06 trillion, Bitcoin remains the largest cryptocurrency in existence.

Can Bitcoin serve as an inflation hedge for ASX investors?

Long absent, inflation fears have been rising as the yields of global benchmarks, like 10-year US Treasury notes, have ramped up to pre-pandemic levels.

ASX investors’ concerns with inflation primarily hinge on interest rates.

If inflation rises too far beyond the Reserve Bank of Australia’s target rate (or the US Fed’s target in the United States), the central banks will have little choice but to ratchet up interest rates to keep inflation in check. That, in turn, can hurt ASX share prices, particularly ASX growth shares, as investors can potentially find better (and safer) returns for their cash holdings.

Gold has long been touted as an effective inflation hedge. And while its performance in this role hasn’t been perfect, holding some gold over the long-term can mitigate the impacts of inflation.

The question more ASX investors are asking now is, can Bitcoin – the so-called digital gold – function the same way?

Because there is a finite supply of Bitcoin, unlike fiat currencies like the US or Aussie dollars, there’s some logic behind Bitcoin hedging against inflation. Though when the US Treasury yields spiked to 1.62% recently, the Bitcoin price fell hard.

What the experts say about Bitcoin as an inflation hedge

Cam Harvey is a senior adviser to Research Affiliates and a professor of finance at Duke University. As Bloomberg reports, Harvey says Bitcoin hasn’t been in circulation long enough to make a definitive call:

What’s going to happen to Bitcoin? It’s really unclear. The price is not just driven by the money-supply rule, it’s driven by other speculative forces. That’s why it’s multiple times more volatile than the stock market.

He adds that investors might shun riskier assets like Bitcoin and other cryptocurrencies rather than turning to Bitcoin to help offset the impact of rising inflation.

Marc Chandler, the chief market strategist at Bannockburn Global Forex, adds, “The kindling wood for inflation exists. One has to make a judgment about whether there’s sufficient spark.”

Chandler looks at “signals such as oil prices, shipping costs, or the price of semiconductors”, all on the rise as the global economy gets back on track to gauge inflation.

Regarding the fast-rising Bitcoin price, he says, “The high priests of the cryptocurrency space look for any reason to help their case. I’m still hesitant to think that Bitcoin tells us anything about high-frequency economic variables.”

Whether ASX investors consider Bitcoin as an inflation hedge, it sounds like the jury is still out on this one.

More reading

• ASX 200 Weekly Wrap: Inflation fears hold ASX down
• Can you manipulate the Bitcoin (CRYPTO:BTC) price?
• Will a US Bitcoin ETF send the Bitcoin price to new record highs?
• Should ASX investors own Bitcoin (CRYPTO:BTC) as a defensive investment?
• Elon Musk reviews title and decides ‘Technoking of Tesla’ is more fitting

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. 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 CSL Limited (ASX: CSL) share price is up by 2.73% today. The positive price movement comes on the heels of news the Australian government has approved use of its COVID-19 vaccine within the country.

At the time of writing, shares in the pharmaceutical giant are trading for $260.87 – up 2.44%. By comparison the S&P/ASX 200 Index (ASX: XJO) is up 0.66%.

Let’s take a closer at the government’s announcement.

CSL-made AstraZeneca vaccine will be used in Australia

The CSL share price is responding well to today’s news. The Therapeutic Goods Administration (TGA) announced late on Sunday it had approved use of the CSL-manufactured AstraZeneca (LSE: AZN) COVID-19 vaccine in Australia. On 16 February, the TGA approved the use of the overseas-manufactured AstraZeneca vaccine.

The approval process has been at least 6 months in the making, according to the administrator. CSL announced a deal with the government back in September 2020 to manufacture the vaccine locally. The government has bought a total of 50 million doses of the AstraZeneca vaccine.

The vaccine will be produced at 2 factories in Melbourne. CSL-Behring Australia, in Broadmeadows, is manufacturing the active raw vaccine material. Vial filling and packaging is being completed at the Sequris (a CSL subsidiary) centre in Parkville.

The first batches of the vaccine are expected to be out in the community within days. The TGA will need to approve every batch before it can be injected into the populace, however.

Australia is currently in the 1b phase of its vaccine rollout. On top of frontline workers and residential aged-care facility residents, anyone over the age of 70, Indigenous Australians over 55, or any adult with an underlying medical condition are eligible for the vaccine. The federal government is administrating the rollout. Vaccine supplies are being provided to registered GPs, pharmacies, and medical centres for mass inoculation.

The approval comes at a critical time for the country. European Union countries have been blocking shipment of AstraZeneca vaccines made in its nations to Australia, with the continental government body citing rising COVID cases and lack of vaccine supply for its citizens.

CSL share price snapshot

Despite today’s announcement, and its government tender, the CSL share price is down more than 3% on this time last year. In fact, the share price hit a 52-week low at the beginning of this month. The strong Aussie dollar hampered interim dividend payments to investors for the FY21 half-year.

CSL has a current market capitalisation of $118.4 billion.

More reading

• ASX 200 Weekly Wrap: Inflation fears hold ASX down
• 3 five-star ASX shares to buy in March
• 5 of the best ASX shares to buy next week
• Why COVID-19 is launching the IDT Australia (ASX:IDT) share price 65%
• Are COVID-19 vaccine worries affecting the CSL (ASX:CSL) share price?

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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Centuria Capital Group (ASX: CNI) shares were edging lower today after the company announced a listed notes offer to the market. By the market’s close, the Centuria share price had slumped 0.21% lower to $2.405.

Shares in the real estate investment trust (REIT) have had a subdued start to the year, losing more than 7% since 4 January. In comparison, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 1% over the same period.

Listed noted offering

The Centuria share price was on the slide today after the company announced the offering of listed notes. Under the issuance, the company aims to raise $100 million, with the ability to raise more or less as required.

The offer will comprise three separate tranches. The first of these will go to institutional investors selected by the company. The second two will comprise a broker firm offer and a security holder offer for all other shareholders. Notably, there is to be no general public offering of the notes.

Under the prospectus of the notes, which outlines the key points of the offering, Centuria advised that the notes will have a term of five years, expiring in April 2026. Also of interest is the face value of $100 per note and the variable, quarterly interest payments expected to be between 4.25% and 4.5% per annum.

What will the money be used for?

According to Centuria’s release, the proceeds will be used primarily to redeem a series of notes that are due to expire in April 2021. However, the funding will also “support Centuria Capital Group’s REIT co-investment programme, strategic acquisitions and accelerate the growth of its unlisted property funds division.”

About the Centuria share price

Centuria Capital is a large Australian manager of real estate and investment bonds. In total, the company manages $10.2 billion worth of assets. It predominantly holds property assets in the office, industrial and healthcare sectors, with 80% of its holdings in Australia.

Like most other ASX shares, the Centuria share price suffered significantly due to the global pandemic. This time last year, which was essentially the peak of the coronavirus-induced selloff, Centuria shares were swapping hands at $1.41. Since that time, the Centuria share price has rallied by around 70%. 

More reading

• What’s happening with the Centuria (ASX:CNI) share price today?
• Centuria Capital (ASX:CNI) reports $57 million healthcare asset purchases
• Centuria (ASX:CNI) share price down after $162 million in equity raising in 8 weeks

Motley Fool contributor Daniel Ewing 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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