Post by
Obscure1 on May 15, 2024 8:09pm
ENB announces a $2.75 billion equity "at the market" raise
That equates to 55 million shares based upon $50 per share. To put that in perspective, it represents about 5 days of trades on the open market which proably means about 10 weeks of actual trading once you back out 10x of algo trading that grossly distorts the real volume.
What does that mean for the ENB share price?
We will likely see a short term dip in the ENB share price. If I remember correctly, the ENB share price immediately dropped about $3 per share when the company did a similar raise at the time the Natgas Distribution deal with Dominion was announced. That raise was for $4.6 billion ($4 billion plus a 15% greenshoe that was fully subscribed). I think the price drop will be smaller this time around due to:
* the size of this raise is smaller (I expect it will be oversubscribed as well so it will top $3 billion)
* I expect the market will see the funding as the last step in finalizing the funding shortfall for the Dominion acquistion
* The timing of this deal is likely a strong indicator that ENB feels confident that the 2nd and 3rd legs of the Dominion asset acquistion will close and probably pretty soon. I expect the market will see that in a bullish light.
Very few if any of us are likely to get a piece of the raise. If the ENB share price does dip, I think it would be a buying opportunity.
What does this mean for ENS shareholders?
The NAV for ENS is directly tied to the ENB share price. If the ENB share price drops, so will the ENS NAV.
ENS shareholders are typically asleep at the wheel when it comes to the happenings of ENB. As such, I don't expect the ENS share price to follow a downward dip in the ENB share price.
It doesn't take much for the Premium to the ENS NAV to jump and the fastest way that happens is when the ENB share price drops and the ENS share price doesn't follow it down.
There is another factor that comes into play. It is already the 15th of May which means dividend hunters will already be thinking about picking up ENS shares for the month end divi.
When you put together the possibility of a sizeable drop in the ENB share price (causing a jump in the Premium to the ENS NAV if the ENS share price doesn't follow it down) along with divi hunters looking to pick up ENS before the close of business on May 29th, it is easy to see that Middlefiled will be working their calculators.
The current ENS share price closed at about a $0.05 discount to the NAV, but that can change in a hurry. Pay attention.