Two listed companies raised similar amounts of capital last week, but their reasons couldn't have been more different and nor could the market's reception.
The $90 million placement to institutions by EBOS, a pharmaceuticals distributor, was embraced by the market but the $70 million placement by retirement village operator Metlifecare, was filled only grudgingly.
EBOS' share price says it all: the theoretical price of the shares after the impact of the placement was $9.29.
Instead the shares rose as high as $11 on Friday before ending the week at $10.80.
Investors are clearly backing EBOS' ability to successfully integrate its $1.1 billion purchase of its Australian counterpart, Symbion.
But investors were grudging about being asked by Metlifecare to put their hands in their pockets yet again, after several other capital raisings in the last few years, especially since the money will be used to retire debt to clear the way for, hopefully a better story in future.
Forsyth Barr analyst Jeremy Simpson said Metlifecare doesn't have a track record yet.
He said most investors want Metlifecare to do the basics and start developing a track record with its new strategy of developing fully integrated retirement villages which have both aged care and a retirement village.
Mr Simpson said the model in the retirement village sector is very powerful if it's done correctly and it's possible to sell down and recycle capital very efficiently through new developments.
But he said Metlifecare has not done that yet and it's an opportunity for the company to prove to the market that it can do that effectively.
Metlifecare's shares closed down 12 cents to $3.26 on Friday after earlier sinking as low as $3.19.
