WHY NOVUS CAPITAL?Novus Capital Limited is an investment and financial services company specialising in Investment Banking, Corporate Advisory and Share Trading services for Australian corporate and private clients, and overseas corporate clients.
A flexible, low-friction way to raise capital
Novus Capital recently advised Locate Technologies Limited (ASX:LOC) on a $2 million At-the-Market (ATM) equity facility, supporting the company as it became Australia’s first listed Bitcoin treasury company.
The facility was established ahead of Locate adding Bitcoin to its balance sheet, positioning the company to monetise a dramatic increase in investor interest and trading volumes.
Using the ATM, Locate was able to raise equity at increasing market prices, providing them the ability to dynamically raise funds, for their Bitcoin treasury strategy. They were able to achieve this without relying on a single, highly discounted capital raise.
This transaction demonstrates how a well-structured ATM can be an effective tool for companies who have either consistent volume in their listed stock or those that experience periodic increases in volume, for example mining exploration companies.
Listed companies need to balance access to equity capital with discipline on price, timing and dilution. Traditional methods of raising capital such as placements, rights issues, share purchase plans and block trades are effective but can be time consuming, and are generally conducted at a discount to the prevailing market price.
An At-the-Market (ATM) equity facility can provide greater flexibility and control for companies to raise equity capital. It allows the company to issue new shares directly into the market over time, at prevailing market prices, within pre-agreed parameters.
Rather than raising a large amount of capital in a single event, an ATM lets you “drip feed” equity into the market when conditions are attractive, for example after a positive announcement when your share price is trading upward and liquidity is solid.
An At-the-Market (ATM) facility is a flexible equity raising program that allows a listed company to issue parcels of new shares into the market over time, at its discretion, within pre-agreed price and volume limits.
While less common in Australia and New Zealand, globally ATMs have become a mainstream tool. In the United States issuers are collectively putting well over US$100 billion of issuance capacity in place each year across hundreds of companies.
Most ASX and NZX issuers rely on a mix of traditional placements, rights issues and convertible notes, and other instruments to raise funds. An ATM facility adds another lever and can reduce reliance on a single, discounted larger transaction. It provides an always-on source of equity for ongoing needs and can complement existing debt and equity facilities.
Traditional equity raises require mandating advisers, preparing documentation, conducting investor marketing and managing regulatory and listing rule steps. By the time a transaction is ready, the optimal window may have passed.
With an ATM facility already in place, when you see strong share price performance (such as after a positive announcement), good daily liquidity and positive investor sentiment, you can deploy the facility within your pre-set parameters and raise capital while conditions are favourable.
Because ATM issuance is spread over time, you avoid a single, highly dilutive event. New shares are typically issued closer to prevailing market prices, and you can scale back or pause issuance if the share price trades below your comfort zone. This allows boards to align issuance with value, using higher price environments to fund growth and protect existing shareholders.
An ATM facility, once established, is a low-touch, repeatable process. There is no need for large investor roadshows or extensive “launch” processes for each raise. Management can devote more time to running the business while still having a reliable method of raising equity capital available to them, to draw on as needed.
While each facility is customised, a typical process with Novus Capital includes these steps.
During this step, the Company (with the help of Novus Capital) agree the various primary elements of the ATM facility such as:
Prepare the necessary facility agreements; and draft template disclosure language and announcements for future use of the facility.
Coordinate with legal advisers to ensure compliance with the Corporations Act, Financial Markets Conduct Act, ASIC and FMA guidance, and ASX and NZX Listing Rules. For example, the 15% placement capacity rule, to consider if shareholder approval will be required at any point.
The diagram below illustrates how the facility will typically operate once established. We provide regular reporting on shares issued, gross and net proceeds, average issue prices and remaining capacity. The company retains full discretion to pause, vary or cease usage at any time.
At-The-Market capital raising facilities are often more cost-effective methods of raising equity capital when compared to more traditional methods. The following is a break down of the various costs involved with the establishment and execution of an ATM facility.
Brokerage fee to be negotiated as a percentage of the gross capital raised under the ATM facility, based on facility size, deal complexity, expected execution requirements and the scope of services provided.
Brokerage fee payable on settlement of each activation (i.e. when Subscription proceeds are received by the Company).
An establishment fee and monthly retainer to be negotiated based on deal complexity, facility size and scope of services (e.g. structuring, execution support, board & investor engagement). Retainer to be payable monthly for the term of the mandate, reviewed periodically by mutual agreement.
Novus will provide a standard draft of its ATM facility agreement and related documentation (including subscription and security documents) for use as the starting point for the transaction.
The Company will be responsible for all external legal costs associated with reviewing, amending or varying the standard Novus ATM documentation, including any Company-specific provisions and advice on ASX/NZX Listing Rules and Corporations Act / FMCA compliance.
Any exchange, registry or issue costs, as well as the Company’s own advisory, accounting and legal costs, are for the Company’s account.
Novus Capital recently advised Locate Technologies Limited (ASX:LOC) on a $2 million At-the-Market (ATM) equity facility, supporting the company as it became Australia’s first listed Bitcoin treasury company.
The facility was established ahead of Locate adding Bitcoin to its balance sheet, positioning the company to monetise a dramatic increase in investor interest and trading volumes.
Using the ATM, Locate was able to raise equity at increasing market prices, providing them the ability to dynamically raise funds, for their Bitcoin treasury strategy. They were able to achieve this without relying on a single, highly discounted capital raise.
This transaction demonstrates how a well-structured ATM can be an effective tool for companies who have either consistent volume in their listed stock or those that experience periodic increases in volume, for example mining exploration companies.
P: +61 2 9375 0100
M: +61 404 047 593
E: haydenk@novuscapital.com.au
Equity capital market transactions, including ATM facilities, are subject to market conditions, regulatory requirements and investor demand. Past market experience, including data on global ATM usage, is not a reliable indicator of future outcomes.
The information provided is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this document you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs. All statements made in this document are made in good faith and we believe them to be accurate and reliable however do not guarantee its currency. You should seek legal or other professional advice before acting or relying on any of the content.
