CRH surprised the market on Tuesday with its announcement of a share placing to raise between €350 million and €380 million. That the group managed to keep the planned fund-raising secret is something of a coup, but the decision to go for a bookbuilding exercise and not announce a price for the offer may not have been the wisest move.
The group could have set the offer at around the market price at the close on the day before the announcement - say somewhere between €19 and €19.50.
It is offering 19.57 million shares and there is no shortage of demand for strong performers. CRH is especially attractive because of its strong performance to date and because of the wide geographical and product exposure it offers. Selling off just under 20 million shares at these prices would not have been a problem . But CRH announced a bookbuilding exercise and the shares fell 5.5 per cent immediately. This lowers the price at which those interested in participating in the offer will be prepared to buy.
From CRH's perspective, however, the placing may be aimed more at who it brings in rather than the precise amount raised. With further expansion in Europe on the cards the group is now anxious to broaden its shareholder base by bringing in more European institutions.
