Entitlement offer
An entitlement offer is a pro-rata capital raise structure giving existing ASX shareholders the right to subscribe for new shares in proportion to their existing holding — either renounceable (rights are tradeable) or non-renounceable.
Definition
An entitlement offer is a pro-rata capital raise structure giving existing ASX shareholders the right to subscribe for new shares in proportion to their existing holding — either renounceable (rights are tradeable) or non-renounceable.
In detail
Entitlement offers are the fairest of the standard ASX raise structures, because every holder receives a pro-rata right. They can be renounceable (rights are tradeable or sold through a shortfall facility) or non-renounceable (rights lapse if not taken up).
Common structures include the accelerated renounceable entitlement offer (AREO), accelerated non-renounceable entitlement offer (ANREO), and the 'PAITREO' structure that uses a shortfall bookbuild for unentitled stock.
Entitlement offers require a prospectus or cleansing notice and a longer offer document than placements or SPPs. The communications spine is wider — institutional and retail, with a longer offer period.
Choice of structure is driven by register composition, raise size, and the corporate adviser's market read. The IR team's role is to make whichever structure is chosen read cleanly to the market.
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