KEY POINTS:
Rakon stock soared 10 per cent yesterday after the company's share placement to raise $60 million for international expansion closed leaving investors wanting more.
Rakon, which makes high-performance crystals and oscillators for global positioning systems, placed 14.6 million shares with local and offshore institutional investors at $4.05.
But, by the close of trading, the shares were worth $4.79 - having jumped 44c after a 24-hour trading halt was lifted.
The shares were already at $4.35 when trade was halted on Monday while the acquisition plans and book build were announced.
Chief financial officer Graham Leaming would not disclose how oversubscribed the placement was but said strong interest had brought in new investors from Australia, the United Kingdom and Asia.
The company did not think it should have asked for a higher placement price despite yesterday's rise.
"The view of the board and management was that it was a fair issue price and, if you look at what the average price was over the preceding five days, it was pretty much in keeping with that," Leaming said.
The $4.05 institutional placement price was a 6.9 per cent discount to the closing price on February 9 and represented a 0.7 per cent discount to the volume weighted average price from the previous five trading days.
Last May, the company's initial public offering issued shares at $1.60 - meaning $1000 invested at that time was worth nearly $3000 yesterday.
Rakon is now expected to rank among the NZX's top 50 companies.
That could generate further share price rises as institutional investment funds, which track the NZX-50 index, will now have to buy into Rakon. Leaming said a place in the top 50 would be a nice milestone.
ABN Amro Craigs analyst Brett Orsler said the leap in share price was probably caused by a combination of high demand and the market digesting the potential advantages of the international expansion.
The money raised will be used to fund the purchase of Frequency Control Products from UK-based C-MAC MicroTechnology for US$37 million.
"The earnings growth over the next few years is fairly strong and it's only going to be stronger with this acquisition," Orsler said.
ABN Amro Craigs has raised its 12-month target price for Rakon to $5.22.
Rakon said the purchase of FCP came with manufacturing operations in Europe and would increase the company's global sales coverage, product range and penetration of high-growth markets.
The company has predominantly focused on the GPS market in North America and Asia but the purchase of FCP will give a stronger presence in Europe and the telecommunications sector.
Macquarie Equities investment director Arthur Lim said yesterday's reaction showed the local market was coming of age.
He said the Australian market had supported growing companies wanting to raise money for years while New Zealand had been more preoccupied with higher dividends.
Rakon also plans to offer existing Australasian shareholders the chance to subscribe for up to $5000 worth of shares through a purchase plan, details of which are expected within a week.
