Carsales.com Raises AUD 380 Million in Institutional Entitlement Offer

Highlights: 

• Carsales.com (ASX: CAR) has announced the successful completion of its institutional entitlement offer.
• A bookbuild was carried out to sell shares that remained unsold in the Institutional Entitlement Offer.
• The retail segment of the entitlement offer is projected to generate around AUD 121 million.

Australian automotive website, Carsales.com (ASX:CAR) announced the successful completion of its institutional entitlement offer, raising AUD 380 million at an offer price of AUD 19.95 per new share. In this article, we explore the details of the offer and its implications for the company's growth plans.

Institutional Entitlement Offer:

The institutional component of Carsales.com's entitlement offer has been completed successfully, with eligible institutional shareholders taking up around 96% of the offer. The proceeds from the fundraising will be utilized to acquire an additional 40% stake in Webmotors and improve the company's financial position by reducing the pro-forma Dec-22 leverage to 1.9x. This will enhance the company's capability to pursue future growth opportunities.

Institutional Shortfall Bookbuild:

A bookbuild for shares not taken up in the Institutional Entitlement Offer on behalf of eligible and ineligible institutional shareholders was completed on 10 March 2023. This process resulted in the Institutional Shortfall Bookbuild clearing at a price of AUD 21.75 per new share, which was a premium of AUD 1.80 compared to the original offer price of AUD 19.95 per new share. Institutional shareholders who were eligible to participate but did not take up their entitlements, as well as some ineligible institutional shareholders, will receive AUD 1.80 for each entitlement sold through the Institutional Shortfall Bookbuild, after any withholding tax or expenses have been deducted.

CEO's Comment:

CEO Cameron McIntyre expressed his pleasure with the strong level of support received from institutional shareholders and their endorsement of the company's strategy. He further added that the acquisition of a further 40% interest in Webmotors is an exciting opportunity for Carsales, and they look forward to continuing to grow the business in the attractive Brazilian automotive market alongside Banco Santander (Brasil) who will be a 30% shareholder and partner in the business after the acquisition.

Retail Entitlement Offer:

The retail segment of the entitlement offer is projected to generate around AUD 121 million, thus increasing the total amount of equity raised by Carsales to roughly AUD 500 million. The offer is fully underwritten, and eligible retail shareholders are entitled to subscribe to one new share for every 14.01 existing ordinary shares of Carsales they hold on the record date of Monday, 13 March 2023, at 7:00pm (Melbourne time).

Trading and Settlement:

The settlement for the new shares offered in the Institutional Entitlement Offer is set to occur on March 20, 2023, with the issuance of these new shares and their trading on the market anticipated to commence on March 21, 2023. Retail investors who meet the criteria have the option to exercise their entitlements by Thursday, March 30, 2023, and acquire fresh shares. They can also sell or transfer all or part of their Retail Entitlements, which will be available for trading on the ASX from 13 March 2023 (on a deferred settlement basis) and from 16 March 2023 (on a normal settlement basis) until 23 March 2023, under the ASX ticker symbol "CARRA."

Conclusion:

Carsales.com's successful fundraising from the institutional entitlement offer and the impending retail entitlement offer will provide the company with the necessary resources to expand its footprint in the Brazilian automotive market. With the acquisition of an additional 40% stake in Webmotors, the company aims to pursue future growth opportunities in the market, which holds tremendous potential for growth.

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