How RareX saved $100k in broker fees while raising $1.5m.
RareX's CEO used InvestorHub to raise capital with a 0% discount directly from shareholders.
- Industry
- Materials
- $2.2m+
- Total bids
- $1.5m
- Capital raised
- $100k
- Broker fees saved
Problem
To raise capital, most public companies rely on intermediaries. This leads to negative consequences, such as heavy discounts, high broker fees, share dilution, and significant post-raise share price slumps. Most public companies need to raise capital once or twice a year but are forced to rely on intermediaries like brokers who only provide indirect access to investors. This causes companies to incur unnecessary fees while increasing dilution for existing shareholders.
Impact
RareX were able to raise with a 0% discount from existing shareholders, and in doing so saved $100k+ in broker fees and 15% in share dilution. They were also oversubscribed, with $2.2m+ in total bids against the $1.5m raised, which meant they could allocate shares to loyal shareholders who were less of a risk of selling off post-raise.
We had the confidence to run our own placement because we identified and engaged with our shareholders beforehand. We didn't issue any broker options or market options and without the discount, that resulted in about 15% less dilution of the existing shareholders than would have been the case otherwise and saved us the best part of $100k worth of fees.
James DurrantCEO, RareX (ASX:REE)Step by step
How they did it.
Four moves, in the order RareX Limited made them.
- 1
Identifying investors
RareX used the registry-integrated investor list to identify a list of the top 50 investors and other high-net-worths to nurture and engage before making a decision on their capital raise.
- 2
Building interest
James Durrant (CEO) personally called and engaged these investors by giving them updates, providing context to key decisions and listening to their concerns, which created interest and confidence in their upcoming placement.
- 3
Converting demand
With the confidence that existing shareholders supported them, RareX executed their own placement without a broker, which enabled them to avoid broker fees entirely and raise with no discount or options to minimise existing shareholder dilution.
- 4
Post-raise engagement
They hosted a post-raise investor webinar and communicated to the market the benefits of managing their own placement with an interactive session, while answering investor questions publicly.
The flywheel
Each turn makes the next one easier.
None of these are needle moving by themselves, but together and over time they combine and grow on each other to make each move more and more impactful.
- Attract
- Reach the whole register directly, rather than the twenty holders who take the calls. More of the register hears from you, so more of it can respond.
- Understand
- Every open, read, click and question is a signal about who is actually paying attention, and to what. The register stops being a list of names.
- Engage
- Answer what shareholders actually asked, while they are still asking it. That earns the next open, which is what makes the next turn sharper than this one.
Which is why the wheel doesn’t just keep turning, it gets better at turning. The register you engage this quarter is the register you understand next quarter.