Share placement compared to share right issue.

[forest]

The first question at the ASM of PPH today was a gentlemen asked why PPH recently had a $25mil share placement instead of a share right issue which is so much more equal to other share holders.

Chris Heaslip answer was that the share placement was more cost effective.

My question is what sort of difference in cost would there be between a placement and a right issue.

I would like a better understanding of this as placement are not unusual on the NZX but seem at times to favour non share holders or larger share holders over others.

[JeremyALD]

Its not just cost but also time. A rights issue can take several weeks and costs a lot more in regards to administration. A share placement is done within 24 to 48 hour and is fairly straight forward if you have interest. The complexity and number of shareholders you're dealing with is why a rights issue is more expensive.

[777]

It seems to be a growing trend. Who cares if it does take longer. It is not as if they decide on Friday night that they need the money by the end of the following week. KPG have just gone through the process and only a 50% take up. The balance were offered to the selected few. Forest is right, a rights issue is far better for all share holders and we should keep at those companies that go that way.

[forest]

Its not just cost but also time. A rights issue can take several weeks and costs a lot more in regards to administration. A share placement is done within 24 to 48 hour and is fairly straight forward if you have interest. The complexity and number of shareholders you're dealing with is why a rights issue is more expensive.

Jeremy, if the company plans probably than time should normally not be a problem.

The cost difference I am really interested in. Because one would think that in the case of a quick placement, there is an other cost to non participating share holders.
This is the cost of the placement discounted more than it would need to be (lower price means more shares issued means more dilution than necessary). I would have thought if shares get marketed to a limited amount of potential takers that the offer price for the issue is likely lower than it could have been when more people had a opportunity to participate.

[peat]

i acknowledge that I felt aggrieved as a non participating shareholder
but reluctantly accept the simplicity of the placement.
if you were a wholesale investor I wonder if you could have joined in?

its more bang for the management time tho, get it done, out of the way

seems to have ignited the price

[JeremyALD]

Jeremy, if the company plans probably than time should normally not be a problem.

The cost difference I am really interested in. Because one would think that in the case of a quick placement, there is an other cost to non participating share holders.
This is the cost of the placement discounted more than it would need to be (lower price means more shares issued means more dilution than necessary). I would have thought if shares get marketed to a limited amount of potential takers that the offer price for the issue is likely lower than it could have been when more people had a opportunity to participate.

Pushpay had pretty low liquidity up until the annoucement so I think it would of required a similar discount to get as much interest as it has. To be honest the SP has gone up almost 20% since the annoucement partly based on strong interest from the placement so it's hard to complain. I do agree that it would of been a nice touch to let shareholders participate and HBL did that quite successfully recently (although even then there were complaints that the process wasn't fair). I think Pushpay went for the easier and less complex option. Whether or not they could of done a right issue without considerable extra cost I do not know, but maybe others can shed light on that :)