Duke Royalty (DUKE.L, Market Cap ¬£95m, 47p, 4.6% of JIC Portfolio and 9.5% of JIC Top 10)
Conclusion: I think it good news that it is raising more equity capital and that it has the backing of new and existing shareholders. It‚Äôs important that it has a healthy mix of equity and debt funding i.e. not too much debt! The shares are on a prospective dividend yield of 6.9%. With more royalty deals signed there is potential for the dividend to be increased, given its policy of paying royalty cash flow as dividends. With each new royalty deal, I think the quality of the business improves through diversification across industries and countries.¬†¬†I have it as Medium Risk/High Return which I am happy with. That suggests for me a target weighting of 5.0%. I am currently at 4.6% which is close enough to 5.0% and so will not¬†participate in the bid. Happy Holder!
The offer is on a first come first served basis and is open until tomorrow evening
Details of the offer through PrimaryBid can be found¬†HERE
After the close yesterday, Duke announced a placing of new shares to raise ¬£20m. The placing is at 44p and it has made ¬£3.9m of it available to retail investors through the Primary Bid platform.
It has firm subscriptions for ¬£16.1m from new and existing institutional investors.
Net proceedings will be used to:
o¬†¬†Secure an additional royalty partner which is currently underletter¬†of intent
o¬†¬†Facilitate multiple follow on investments within the existing portfolio
o¬†¬†Pay down inherited credit facility immediately
o¬†¬†Provide funding for the Company’s strong pipeline of additional royalty partners
Neil Johnson, CEO of Duke Royalty, said:
“We are delighted with the support new and existing institutions have shown for our strategy to enhance the robust, predictable, long-term returns we have demonstrated for shareholders. ¬†In addition, we are pleased to be able to offer non-institutional shareholders the ability to join the register through the launch of a Retail Offer and direct subscriptions, and we will provide an Open Offer for all existing shareholders. This will enable private investors and family offices to subscribe for new shares on the same terms as institutional investors.
“We are excited to continue building the diversification of royalty partners and to support existing royalty partners in their acquisition strategies. ¬†Our revolving line of credit means the Company can efficiently use our balance sheet to continue to deploy capital.¬† Royalty finance businesses¬†been proven over market cycles to provide both income and capital gains to public shareholders due to the long-term predictable cash flows they deliver, and we look forward to continuing to build our business for the benefit of our shareholders.”