The arbitrage opportunity is potentially attractive but it can backfire. The greater the potential profit the greater the chance of over subscription and heavy scale back. The SPP docs may say nothing about how a scale back will be done. In the recent Ansell SPP which was heavily oversubscribed, and offered good arbitrage, the size of the prior shareholding made a difference to the allocation under the SPP. I was not a very large holder and only got allocated enough shares so I would not be diluted and most of my SPP money was refunded. Larger shareholders got proportionally more, even all they applied for. Quite a few holders sold all their existing holding after applying under the SPP and found they actually had to buy on market if they wanted to get back to the size of their earlier holding. Their arbitrage profit disappeared.
IPH Price at posting:
$6.48 Sentiment: Hold Disclosure: Held
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