@PinchOfSalt Let's start with the pros and cons although I believe most would be aware

Pros

* Guarantees that the required amount will be raised

* Gives confidence to retail investors that the raise is fully supported

* Company can concentrate more on running the business while the underwriter assists in raising the required funds with existing and potential shareholders.

Cons

* Underwriter fees so more costly as you pointed out.

* Company effort and labour in attracting funds themselves means management has less time on running the business during the period.

Also it is debatable whether the underwriter will sell immediately for a quick profit after the raise as I don't think there is much discount compared to an IPO where there could be hidden options and escrow shares lurking in the background.

Personally I would like the reassurance of an underwriter especially when company performance or management has been questionable as in this case Impedimed. But sometimes even the underwriter or lead manager gets it wrong.

I think IPD did quite well here. I have seen some raises with no underwriter that did not raise the required amount. Alkane Resources on the Boda discovery comes to mind.

On another note, Bill Beament's Develop has done a few raises and they have been all underwritten even given his track record. Personally I would participate in any Beament raise - underwritten or not - but I am digressing yet again.

Here in IPD I'm not so sure given the long term performance and the amount of trapped holders at 1.50 more than 5 years ago.

However the sudden injection and energy in the potential applications for their main product is a refreshing change.

To be fair, I probably should have done a Damodaran real option valuation like what I did with AMI but it takes more time to do.

Thanks for the comprehensive reply @edgescape.

I’m glad that they didn’t take all of it like Droneshield did. I also like how they didn’t give any shares from the CR to very small holdings eg. 1 single share. I think this helped for there not to be a sell off immediately post placement. In fact its sentiment is definitely north last couple of days, no real reason other than that at this stage.

Another semi solid 150k buy from the board today after reimbursement news from 3 insurance companies has me increasing the chance that Impedimed is actually seeing leads for sales. It is the boards to lose with massive first mover advantage and specific device written into guidelines, will hopefully see by the end of the year that the right direction has been taken. I feel the risk of the board outweighs the potential massive upside of recurring revenue.

@PinchOfSalt Yes that is a risk and there are reasons why that happens also.

Aurelia metals is the best example of an underwritten raise by large instos where sp has fallen - when I saw Mitsubishi enter the register and the new CEO, I decided to exit on the rally as I had doubts as the CEO didn't have much of an operational background and Mitsubishi has a habit of lending out shares to instos. Now the share price has got nowhere.

Also you have to look at each raise on its merits.

What I'm starting to learn is I think it comes down to whether the purpose/object/use of the capital is very clear, how the capital will add value to equity, management execution and past history.

So really it doesn't matter if it is underwritten or not. I felt I needed that reassurance from IPD given the past history. However it seems they had a very clear purpose for the use of capital.