Commodities
| Sector | Commodities |
| Sub-sector | Critical minerals |
| Location | Australia |
Lynas is the only producer of both light and heavy rare earth oxides which are used in high strength permanent magnets critical to modern life, defence and the energy transition.
Lynas’ share price had gained more than ~120 per cent in the eight months leading up to the transaction, largely on the back of strong investor sentiment for rare earths stocks and Lynas’ position as the largest producer of rare earths outside China.
With the rare earths market at an inflection point and public sector support for supply chain security increasing, Lynas’ key financial and strategic goal was to provide financial flexibility to accelerate its growth opportunities under its planned ‘Towards 2030’ strategy.
Macquarie Capital has deep expertise in critical minerals, evidenced by our number one position for M&A in the sector,1 and in equity capital markets.
Macquarie Capital acted as joint lead manager, underwriter and bookrunner to Lynas Rare Earths on its announced fully underwritten $A750 million institutional placement (Placement).
Macquarie worked closely with Lynas to articulate the rationale for the equity raising in the context of its ‘Towards 2030’ strategy and the opportunities the company was seeing in a dynamic market. To provide funding certainty to Lynas and avoid leak risk, a hard underwrite was provided to Lynas for the Placement at launch.
Lynas offered the Placement on a pro rata basis to eligible existing shareholders (using best endeavours). Under the Placement, all institutional shareholders who bid for an amount less than or equal to their ‘pro rata’ share of New Shares were allocated their full bid.
In addition to the Placement, Lynas also undertook a non-underwritten Share Purchase Plan (SPP) targeting to raise up to $A75 million, which was subsequently upsized to $A182 million based on demand. Under the SPP, eligible shareholders had the opportunity to subscribe for new shares at the same price as offered under the Placement up to the value of $A30k per shareholder. This enabled an estimated >98 per cent of Lynas’ registered holders (by number) to have the ability to participate in the equity raising on a pro rata basis.
Given the rapid growth in the share price leading up to the transaction and Lynas’ share price trading above broker target prices, pricing of the equity raising was more complicated. The deal was ultimately priced at a 10 per cent discount to the last closing price, which represented a 32 per cent premium to the 90-day volume-weighted average price, balancing the objectives of Lynas and its shareholders. Two weeks after completion of the Placement Lynas’ share price was trading approximately 7 per cent above the offer price.
Outcome
Importantly, Lynas’ pro forma cash balance of $A902 million post the Placement and SPP completion provides significant balance sheet flexibility to fund opportunities under its ‘Towards 2030’ strategy.
The deal capitalised on the recent high level of interest and positive market sentiment towards rare earths. Lynas is at the forefront of this momentum, and the proceeds from the transaction will ensure it is well positioned to capitalise on the available opportunities in the sector.
of rare earths outside China
of separated Dysprosium & Terbium oxides outside of China
Successful delivery of the Lynas 2025 Growth Strategy
Placement |
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