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Company makes a wholesale placement but no retail offer – is that fair?

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Question asked 21/06/2025

Company makes a wholesale placement but no retail offer – is that fair?

Hi A company that I own shares in made a wholesale placement in May after it was approached by institutional investors. Because the size of the placement was below 15% of shares on issue it didn't need shareholder approval and it was fully subscribed. I'm assuming one reason for going the wholesale route is because there are fewer compliance requirements compared to a retail offer. Obviously that placement dilutes existing shareholders. At this stage there has been no mention of a retail offer (which may change of course). If you were a retail shareholder would it annoy you if you weren't offered the opportunity to increase your holdings along with the various institutions who were involved in the placement. Cheers, Carl

Answer

Hi Carl,

The answer is yes, but life is rarely fair! There are a few simple reasons behind the action which makes sense for the company:

It avoids the long, costly process of retail offers with fewer investors means simpler administration and greater speed.
Institutions can act with greater speed, often at a smaller discount, helping the company get certainty over how much capital is raised and at what price.

Ultimately, Institutional-only placements are fast, efficient, and lower-risk ways for companies to raise money with minimal market disruption, but you are right, it’s not the fairest way to do it.

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