VOTE OF CONFIDENCE
Ascendis Health executives spend millions on buying up company shares
LISTED Ascendis Health’s executive team gave the company a big vote of confidence as they invested millions into buying shares as it successfully raises cash.
Of note, Karsten Wellner, the chief executive of Ascendis, as part of the rights offer bought 431 527 shares at R22 per rights offer share worth R9.49 million, with Cliff Sampson, the executive director, buying 71 175 shares for R1.5m, and Kieron Futter, the chief financial officer, buying 41 715 shares for R917 730.
Non-executive directors also showed their confidence in the company, with Chris Dillon spending R30m on stock and Gary Shayne, directly and indirectly, investing just more than R170m.
Confidence
This as Ascendis Health said to shareholders on Monday that its rights offer to raise R1.2 billion was oversubscribed, with support received for 300 percent of the offer.
It said the company had secured the required funding to conclude its recent R7.3bn acquisitions of global pharma company Remedica Holdings and European sports nutrition company Scitec International.
Wellner said shares in the rights offer had been a 10 percent discount to the share price.
“The market loved it. We were very surprised on Friday when we found out the amount of shares sold,” he said. “I believe in my management and the investment story. I want to be a big shareholder and don’t want my shares to be diluted going forward.”
Wellner said on the rights issue: “This overwhelming support from the local and international investment community is extremely encouraging, and a continuing vote of confidence for our proposition, our delivery and focused globalisation strategy.”
Ascendis had also secured an additional R2.3bn undertaking from existing and new strategic shareholders and entered into an underwriting agreement with Absa Bank and HSBC Bank to fully underwrite the rights offer.
Remedica is a generic pharmaceutical company with a presence in more than 100 countries and a major supplier of pharmaceuticals to NGOs active in medical relief.
Scitec is a leading European sports nutrition company that sells its products in almost 90 countries globally.
Globalisation
The European acquisitions cushioned the company against its biggest risk – rand volatility and are in line with the company’s acquisitive growth strategy.
The products and distribution networks offered by the Remedica, Scitec and Ascendis complement each other and will make it possible for the combined group to offer a broader range of health products to more people.
Ascendis said the underwriting of the rights offer was not required as the 54 million rights offer shares were taken up by shareholders.
Additional support, via the irrevocable undertakings, was received from a mix of local and international investors, including the International Finance Corporation, a division of the World Bank.
Ascendis Health expects the transactions will be concluded by September, and will boost Ascendis’ current market cap from R7.3bn to more than R10bn.
Last month the Public Investment Corporation, acting on behalf of the Unemployment Insurance Fund, came out in support of about R1.8bn in investment into listed Ascendis and diversified consumer goods business Bounty Brands.
Ascendis has a return on equity, which the amount of net income returned as a percentage of shareholders equity of 14.69 percent.
Its price to earnings ratio (p:e), which is the ratio for valuing a company that measures its current share price relative to its per-share earnings, is at 27.5 percent with a forward p:e of 17.18 percent.
Michael Treherne, a portfolio manager at Vestact, said Ascendis’s rights issue was from a position of strength and investors would want to be part of its positioning.
The management buy in showed the conviction of where they saw the company in the future.
Treherne said the p:e was not out of line with general pharmaceutical stocks. It was a fast-growing industry, with people being more health conscious.
It was also not overly expensive as Ascendis was expanding globally and was not so South Africa focused, he said.
Ascendis shares fell 2.71 percent on Tuesday to close at R24.40.
R7.3bn Ascendis’ current market cap, which it hopes to raise to more than R10bn