Don't know how many forumites hold Rhodes Food Group (RFG), but I do - not a lot 1,500. The company announced a book build exercise this week where they were offering up 25 million shares to institutional investors, but, not to ordinary shareholders. Today they announced the successful placement of all shares at an agreed price of R 26.50 being a 2.3% discount to the 30 day weighted average price. These shares will now rank alongside the ordinary shares and will enjoy any dividends going forward.
I find these types of book build exercises most disingenuous given that ordinary shareholders can't apply in the first instance, secondly the allocation is done at a discount, and thirdly they will enjoy dividends like the excluded shareholders all from a smaller pot of dividend funds. To my mind the shares should have been taken up at a premium so that the ordinary shareholders are compensated in a sense for lose of dividend value.
But hey I suppose that's how the big businesses roll these days - screw the smaller shareholders. This does have a downside of course in that the JSE will not be able to encourage small investors to invest in the JSE boards - in fact our private individual investment in the bourse is nowhere near what the private investment is in say the NYSE, or even the LSE
Just my thoughts on a ticklish issue
