IOF had a rights issue at 80c. The institutional component was accelerated and completed in December. The retail component closed on Thursday Jan 8th. Traded briefly above 80c during the offer period, was around 75c when it closed. Expectation, not many takers.
IOF announced Thursday 15th that only 7m shares taken up by "retail" shareholders in rights issue. Underwriter JPMorgan got 50m shares at 80c. They were selling them today 60c.
Do the math. Losing 20c a share on 50m shares, they lose $10m. But the underwriting fee was $12m so they are still on a $2m profit there. So don't feel to sorry for JPMorgan ! Shareholders who actually paid up for their shares lost 25% in a week.
Some curious things:
IOF started plumetting on tuesday. Presumably the knowledge of the massive shortfall in the issue was leaked to insider traders on Tuesday.
Appendix 3B states the new shares alloted friday 16th. How then is the underwriter selling them the day before ? Were the underwriter's shares issued earlier than the appendix 3B states ? Or are they selling short ? Or can they sell now, because the shares will be issued in time for T+3 settlement ?
I suspect 60c will seem like a great bargain once the underwriter ceases dumping the shares.
Add to My Watchlist
What is My Watchlist?