"Are you participating in the SPP @madamswer ? Not the simple...

"Are you participating in the SPP @madamswer ? Not the simple decision it was a few weeks ago, at >$11.20. Was always planning on applying, but after the recent price decline and possible selling pressure with new shares about, I'm not so sure now. Wouldn't normally be buying at this price and I don't think a discount of 2 percent plus brokerage is enough incentive to change my mind."


@ace7979,

For what it is worth, no, I am not participating in the SPP.

There a re a few reasons for this:

1. Valuation (the most important one by far)
2. Existing portfolio weighting
3. Materiality

Dealing with 2 and 3 first: I already have a meaningful portion of my invest-able capital sitting in IFL (around 4%), which - given the current valuation of the stock - is more than sufficient. Also - without disclosing my personal financial position - the quantum of this SPP quantum is not material to me.

So, with that contextual backdrop, let's talk about the thing that really matters: Valuation.

For me, what does not matter to me one jot is whether or not the raising price is 2%, 5%, 10% or whatever % below the prevailing share price at any given point in time.

The critical criterion is whether or not the stock valuation is cheap enough.

And, in IFL's case, a market value of ~$10.50 per share does not sufficiently undervalue this business, in my view [*]. Well, not enough for me to add to my 4% portfolio position, either buy purchasing on-market, or via the SPP - or both.


[*] This ANZ Wealth transaction is a very significant one, and it is likely to be very value-accretive. But it is also a very complex transaction (it took me the better part of a full morning to model its financial and valuation impacts on IFL, and even then, the final answer to which I came, is merely proximal). The problem with this deal - and the thing I expect the market will continue to grapple with for the next 18 months, at least - is that all the valuation uplift is back-loaded in time. Very back-loaded, namely to 2020/21. In the intervening period between now and then, it will be a game of patience. And in my experience, the market is mostly an impatient animal.