What I am about to say is arguable bit does provide one perspective on the Caspin IPO.
The Caspin IPO has raised $8m and led to the issue of 40m new CPN shares at 20c each. Caspin had pre float, 20,071,922 shares (owned by ex-Cassini shareholders).
One perspective is that provided these pre-float shareholders had the money, they and they alone should be allowed in the float. After all it was their company pre-float and based on equity, it makes sense it should be their company post float. The problem with that logic is IPO's are expensive and you need to be sure the necessary money (here minimum $6m) can be raised. Maybe these shareholders would have found the $6m, maybe not. It was a big risk.
Additionally without discussing them, there are other arguments that apply as to why limiting the IPO to the pre-float shareholders is either not realistic or sensible. These include advantages of broadening the share base, motivating employees, compliance with listing rules, compensating lead managers, strategic issues etc.
Accepting this, how should Caspin shareholders (pre-float) be treated in the IPO?
I have suggested previously that these shareholders should be happy if they end up with three times their pre IPO shareholding in Caspin as that would maintain their current interest in the company and they would not have been diluted. So if you had 1000 shares pre-float and end up with 3000 post-float, that is ok (that is broadly equivalent to the ratio of 20m CPN shares pre-float to 60m post-float).
On this basis, frustrations associated with any scale back is mostly irrelevant. What really matters is did the owners of Caspin pre-float have the opportunity to maintain their relevant interest in Caspin.
For those shareholders who owned 5,000 or less CPN shares pre IPO the answer is 'yes'. Provided they subscribed early enough they got 10,000 extra shares in the float. (I note these shareholders, in terms of number, may have been around two thirds of all Caspin shareholders pre-float). Also big shareholders (those owning more than 5% that could be identified) were broadly able to maintain their interest so the answer for them is also 'yes'.
For shareholders in between the very large and very small it is not clear to me at this time as I have no information on how allocations were made.
Having said that, I would suggest that the top up facility may have been the only way small shareholders participated in the IPO. If so, those shareholders holding more than 5,000 shares but less than 10,000 shares may have had their interest in Caspin diluted as they were unable to receive more than 10,000 additional shares.
If so, this is a pity. Only $400,000 of the $8m raised was set aside for these small shareholders and it would have been equitable for Caspin managers to provide a little more of the $8m to these shareholders to ensure they could maintain their equity in Caspin, if they wished.
It will be interesting to learn about the allocation and how the middle shareholders in Caspin (pre float) have been treated ie broadly those holding more than 10,000 shares. My gut feeling is they may have been the ones treated unfairly.
We shall see.
To all CPN holders, good luck tomorrow.
CPN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
