Sydney Airport share price down slightly after raising $1.3 billion

The Sydney Airport Holdings Pty Ltd (ASX:SYD) share price is edging lower today after raising $1.3 billion from institutional investors…

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is edging lower after returning from its trading halt.

At the time of writing the airport operator's shares are down 1.7% to $5.30.

Why was the Sydney Airport share price in a trading halt?

Sydney Airport requested a trading halt earlier this week while it launched a fully underwritten $2 billion equity raising.

Pleasingly, this equity raising has been going very well, with the company announcing the completion of the institutional component of its offer this morning.

According to the release, Sydney Airport has raised gross proceeds of approximately $1.3 billion from institutional investors. These funds were raised at $5.30 per new share, which was $0.74 above the offer price of $4.56 per share. It represents just a 1.7% discount to its last close price of $5.39.

Management advised that the institutional entitlement offer attracted strong demand from Sydney Airport's institutional shareholders, with approximately 93% of entitlements available to eligible institutional securityholders taken up.

Sydney Airport Chief Executive Officer, Geoff Culbert, was very pleased with the success of the equity raising.

He commented: "We are delighted by the support shown by our institutional securityholders. The fact that the take up was well over 90% and that the renounced entitlements were placed at a price above TERP supports our decision to use a renounceable offer structure."

"Participating securityholders haven't been diluted and those renouncing securityholders who either couldn't or chose not to participate will be compensated through the proceeds of the institutional shortfall bookbuild. We now look forward to our retail securityholders getting the same opportunity to invest on a pro-rata basis," he added.

The chief executive believes that this strong demand shows that institutional investors have confidence in the airport's long term prospects.

Mt Culbert said: "The strong demand from institutional investors demonstrates belief in the long-term fundamentals of Sydney Airport. This equity raising will strengthen our balance sheet, ensure we are well-positioned to meet any future challenges presented by the COVID-19 crisis, and gives us the flexibility to make the most of opportunities that arise through the recovery. We thank our investors for their ongoing support."

Traffic update.

In addition to the above, the company also released a traffic update for the month of July. And as you might expect, Sydney Airport was a bit of a ghost town once again during the month.

According to the release, total passenger traffic in July was 317,000 passengers, down 91.8% on the prior corresponding period. This comprised 42,000 international passengers (down 97.2%) and 276,000 domestic passengers (down 88.5%).

Management notes that the modest recovery in domestic traffic in July was driven by a brief window where unrestricted travel was permitted between NSW, Victoria, and Queensland.

It believes the increased traffic during this short window shows there is pent up demand for interstate travel, which could be good news for the likes of Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Broker Notes

10 of the best ASX shares to buy in 2025

Analysts think these shares are in the buy zone for investors in 2025.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Why Bowen Coal, Droneshield, Mesoblast, and St Barbara shares are racing higher today

These shares are ending the week positively. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Cettire, Digico, KMD, and WiseTech shares are falling today

These shares are out of form on Friday. But why?

Read more »

Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys right now.

Read more »

Broker Notes

Brokers say these ASX growth stocks are top buys

Analysts have good things to say about these shares this month.

Read more »

Share Market News

Bell Potter names 2 of the best ASX 300 stocks to buy in 2025

These could be best buys next year according to the broker.

Read more »

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Friday

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) went into the Christmas break with a small gain. The benchmark index rose 0.25%…

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Broker Notes

Invest $1,000 into Pilbara Minerals and these ASX 200 stocks

Analysts have named these shares as top picks for a $1,000 investment. Let's see why.

Read more »