On 16 November 2016, logistics real estate investment trust (BE-REIT) Warehouses De Pauw launched a public capital increase in cash with irreducible right of allocation for existing shareholders in order to finance its announced investment pipeline as part of its growth plan.
To achieve transparent and competitive pricing, the2.4 million new shares were offered to international institutional investors before the public offering in a private placement subject to the existing shareholders' exercise of the irreducible rights of allocation (clawback). This private placement was followed by a public offering of the new shares to existing shareholders, who could subscribe to the capital increase by exercising the irreducible rights of allocation associated with their existing shares. Approximately 83% of the existing shareholders subscribed to the capital increase, which allowed WDP to raise around EUR 177 million.
The conventional method of the rights issue was not used for this capital increase. Instead, a new transaction structure for BE-REITs was developed, whereby the private placement of the new shares for institutional investors was completed through accelerated bookbuilding before the public offering of the new shares with irreducible rights of allocation. BE-REITs are required by law to give priority to the existing shareholders (via irreducible rights of allocation) when the conventional preferential subscription right is lifted. The issue price was therefore determined in this private placement, whereby the shares were conditionally allocated to the institutional investors and were later proportionally reduced based on the number of irreducible rights of allocation exercised by the existing shareholders. In previous public capital increases of BE-REITs, the price was always set at the start of the public offering with preferential subscription right, which was closed with the private placement (at the same price) of the remaining shares to which the existing shareholders had not subscribed.
Eubelius advised WDP on the successful fulfilment of this successful capital increase and the development and implementation of this new transaction structure.