ASX Goes the Wrong Way on Capital Raisings

The Australian Stock Exchange has released a consultation paper looking to cut the time required for companies to raise capital. Whilst the goal of the proposed changes, to protect smaller shareholders from unfavourable placements to large shareholders, is laudable enough, I’d suggest that by streamlining the capital raising process the ASX is actually doing shareholders a huge disservice. In truth it is too easy to raise capital in Australia. The recent Billabong raising is a perfect example. After calling a trading halt and announcing yet another earnings downgrade, Billabong announced a $225 million non-renounceable, fully underwritten, six for seven share issue at a...

The Australian Stock Exchange has released a consultation paper looking to cut the time required for companies to raise capital. Whilst the goal of the proposed changes, to protect smaller shareholders from unfavourable placements to large shareholders, is laudable enough, I’d suggest that by streamlining the capital raising process the ASX is actually doing shareholders a huge disservice.

In truth it is too easy to raise capital in Australia.

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