Entrepeneur Steve Hudson poses in front of a truck he has financed in Toronto, April 8, 2011.J.P. MOCZULSKI/THE GLOBE AND MAIL
When bankers talk about Element Financial Corp. founder Steve Hudson, they are appreciative of the way he handles public offerings.
Mr. Hudson is known for leaving a bit of money on the table to ensure a little lift for those who buy into Element's offerings. It's sound strategy for the lease-financing company, as Element taps the markets regularly. And it means that Element's offerings have tended to be oversubscribed and trade up once they're done.
That stands out among a bunch of other recent offerings of late that have struggled because of aggressive pricing.
Element's big financing in recent days is another example, as the company sought to raise $1-billion to finance the purchase of helicopter and rail car leasing assets.
The equity portion was upsized from $325-million to $400-million, and was said by bankers to be about three times oversubscribed. That was led by GMP Securities, BMO Nesbitt Burns Inc., CIBC World Markets Inc. and RBC Dominion Securities Inc.
It doesn't hurt that Element has been a strong performer, and investors are keen on non-resource equities. But there was also a healthy discount of 4.1 per cent on the deal, with the price set at $13.75 a share when the stock had recently closed at $14.34. The stock is now back to $14.06.
Compare that to the $3-billion (U.S.) bought deal in October for Barrick Gold, which struggled mightily. Barrick went out at a discount just a little over 5 per cent, when its stock had been in a steady decline and the outlook for its business was up in the air.