The Afterpay Ltd (ASX: APT) share price is pushing higher on Tuesday following the release of an update on its share purchase plan.
At the time of writing the payments company's shares are up almost 4% to $69.00.
What did Afterpay announce?
This morning Afterpay provided the market with an update on the share purchase plan it announced with its capital raising on 7 July.
Afterpay was aiming to raise approximately $800 million via a fully underwritten $650 million institutional placement and a non-underwritten share purchase plan that aimed to raise approximately $150 million.
The company's $650 million institutional placement was strongly supported by new and existing shareholders and completed successfully last month at $66.00 per new share.
However, Afterpay's share purchase plan wasn't quite as successful as the company might have hoped.
According to today's update, just 10,110 valid applications were received, out of 53,465 eligible shareholders. This represents a participation rate of 19% based on registered holdings.
And although shareholders had the opportunity to apply for up to $20,000 worth of new shares, the average application fell well short of that at $13,300.
This ultimately means that Afterpay raised approximately $136 million from its share purchase plan, which was $14 million short of its target.
Why did Afterpay fall short of its target?
Given that the shares from the share purchase plan were issued at $66.00 per share, I suspect that the discount was not enough for most investors.
For example, on Monday the Afterpay share price was changing hands at $66.50. This means those that did take part in the share purchase plan have ended up buying shares at just a 0.75% discount to the last close price.
And while the discount was a little more generous at ~3% on the closing date of the share purchase plan, it clearly didn't prove to be enough for most eligible shareholders to part with their hard-earned money on this occasion.
Nevertheless, with the Afterpay share price zooming higher today following strong gains on Wall Street overnight, it has ended up being a reasonably positive result for those that took part.
