Equity raise process, page-71

@zebster Once again some problem with the reply function.

Thanks for your very constructive and comprehensive reply. You raise some interesting points about risk. No doubt there are many scenarios which could have transpired at those meetings. Alas I can only speculate which generally isn't very rewarding, I'm a fan of Occam's razor in this regard. I think it is a smaller task though to try and understand valuation at the company scale than valuation at the market or macroeconomic scale. There are far fewer assumptions required. So it's bottom up for me and i will also stay clear of discussion about the direction of markets. Incidentally I wonder how may people are aware that the US is in a technical BULL market at the moment ( Up 26% from its low point on the 23rd March)? Crazy stuff.

The concept of risk is understated in the general discourse around equity markets, particularly outside professional participants. Your discussion of the underwriters role in the capital raising highlights that risk means different things to different people. I think I am often somewhat naive in thinking that risk relates solely to the underlying instrument, FLT share valuation in this case. I guess this comes form the position of being a long (and long term) investor who considers myself an owner in the business. I have taken part in a number of placements over the years and have never invested with a view of the short term markets or the arbitrage discount on hand. From time to time a placement is made in the market place which is above the market value for the shares. I am always impressed when I see this because I can see that all participants have an understanding of the intrinsic valuation, (no doubt higher still than the price paid). I always imagined if I were to act as an underwriter that I would only do so if I felt the underlying security was a good investment. Perhaps I wouldn't do very well in that industry?

For my interest, and I understand if you don't wish to disclose, @zebster do you have a financing background? Also what is your interest in Flight Centre? This place works best when we have a range of experience and views contributing to discussions.