This article is from the Australian Property Journal archive
HOME builder AVJennings is looking to raise $30.4 million to fund the expansion of the built-form housing business and general working capital.
AVJennings is undertaking a fully underwritten 1 for 2.67 pro rata accelerated renounceable entitlement offer of approximately A$30.4m at an issue price of A$0.20 per share and its largest shareholder, Simon Cheong’s SC Global Developments Pte Ltd (53.95%), has committed to take-up its pro rata entitlement in the institutional entitlement offer, which represents $16.4 million of new shares.
AVJennings CEO Phil Kearns said following a challenging year, the company has been, and continues to remain, prudent in its capital management and acquisition activities.
“While no acquisitions were made during 2HFY23, AVJennings retains a very strong, and geographically diversified, pipeline as the basis of future growth with 14,094 lots under control across Australia and New Zealand.
“The medium-term outlook for Australian housing remains positive, largely supported by a growing structural imbalance between population growth and low unemployment driving demand, and significant supply shortfalls. In the short-term, while early signs of improved consumer confidence are being seen, market conditions are expected to remain subdued until interest rate stabilisation is achieved and no further interest rate rises forecast,” he added.
“Notwithstanding this, AVJennings has seen enquiry levels sustained in line with long-term averages, indicating pent-up demand, particularly for more affordable built-form housing. This presents a strategic opportunity for the company to construct built-form homes across a greater proportion of its land lots, where 62% of the work-in-progress portfolio relates to built-form product (51% in FY22).
“Whilst uncertainty remains until there is interest rate stabilisation, the medium-term market fundamentals remain positive. There is a clear, and growing, supply shortage, and we’re seeing an encouraging shift in demand from buyers for more affordable turnkey housing. This trend, along with our recent investment in Pro9’s walling system and today’s Equity Raising, places the Company in a strong position to capitalise on the increasing demand for more built-form housing options and deliver positive returns for investors,” said Kearns.
The issue price represents a 50.0% discount to the last closing price of $0.40 on Tuesday, 10 October 2023 and a 42.1% discount to the theoretical ex-rights price of $0.346.
Approximately 152.1 million new shares will be issued under the Equity Raising, representing 37.5% of AVJennings existing shares on issue. The new shares will rank pari passu with existing shares.
