Struggle with your logic there dgg. a) non renounceable means...

Struggle with your logic there dgg.

a) non renounceable means cash will need be stumped up by existing holders. For any shortfall existing holders will be able to exercise over-allotment privileges and take that stock.

b) for there to be any stock to 'dump' there underwriter must get hit first. non renounceability minimizes the risk of that as a first point, second being the project being value accretive, and third the rasining being priced fairly


Given a), it is likely that many holders (including several of the top 20) will NOT be willing to fully exercise.  I am not privy to any potential arrangements that KAR may have with selected institutions who will be willing to overscribe, but even if they exist, the point remains that current holders will not get the value capture (if we take the point that the shares are undervalued and any deal is accretive).  And in their absence the underwriter will almost certainly plan to sell down within 12 months (I presume much sooner) - not to mention the cost of the underwriting...