NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Brian Gaynor: Small shareholders left out in the cold

Brian Gaynor
By Brian Gaynor
Columnist·NZ Herald·
11 May, 2019 08:10 PM7 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌

Subscriber benefit

The ability to gift paywall-free articles is a subscriber only benefit. See more offers by clicking the button below.

Already a subscriber?  Sign in here
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Photo / 123rf
Photo / 123rf

Photo / 123rf

COMMENT:

John Hawkins, who stepped down as chairman of the New Zealand Shareholders' Association (NZSA) last week, departed with a final plea on behalf of members.

On April 30, his last day as a stellar NZSA chair, he severely criticised Ebos for its $175 million placement to institutional shareholders.

Hawkins was quoted as saying: "the issue which was discounted 8 per cent below the market price was a free gift to a few privileged larger organisations at the expense of many smaller investors".

Ebos raised the new capital to repay debt but Hawkins argued: "They could have done an accelerated rights issue to achieve the same outcome which would have treated every investor fairly, but they have deliberately chosen not to do so. Adding insult to injury, Ebos has paid to have the issue fully underwritten which is a further impost on the majority of shareholders who cannot participate".

Make it your business to know

Start your day with the latest business headlines straight to your inbox.
Please email me competitions, offers and other updates. You can stop these at any time.
By signing up for this newsletter, you agree to NZME’s Terms of Use and Privacy Policy.
Advertisement
Advertise with NZME.

Ebos chairman Mark Waller has a different view, which he expressed in an email to an NZSA member. Waller wrote: "The Ebos board was very mindful of any potential dilution to smaller shareholders when considering how best to raise capital. Just prior to Christmas last year, we planned a similar capital raise with an allocation for all shareholders under a SPP (Share Purchase Plan). This did not work owing to global market timing factors".

He continued: "We currently have a number of interesting opportunities which made it worth raising some extra capital quickly to allow Ebos to be in a position to seriously consider them. The capital raise we have just made was several times over-subscribed and in particular the demand from Australian institutions was important for our future growth and ASX listing. Since the modest capital raise (relative to Ebos's size) our share price has strengthened beyond what it was prior so there has been no loss of value to you".

The NZSA is totally opposed to these placements, particularly when they aren't accompanied by SPPs or other retail components, but many companies strongly supported their decision to confine these placements to large institutional investors.

Advertisement
Advertise with NZME.

The accompanying table shows that NZX listed companies have raised $1.659 billion of new capital since the beginning of 2018 — $1.226b, or 74 per cent, through conventional rights issues and the remaining $433 million through placements.

These rights issues and placements are keenly sought after, particularly as the NZX has had no IPOs over this 16-month period.

Discover more

Opinion

Brian Gaynor: Should Fonterra list before it's too late?

05 Apr 06:50 PM
Business

Brian Gaynor: The Kiwi companies facing the music

12 Apr 11:00 PM
Business

Brian Gaynor: NZX must end drought of listings

26 Apr 08:40 PM
Opinion

Brian Gaynor: Top government entities must do better

03 May 08:20 PM

Ebos has had the largest placement, raising $175m, and Precinct Properties is in second place with $130m. The Precinct Properties issue was also underwritten but its price discount was only 3.6 per cent compared with 8.0 per cent for Ebos.

Precinct Properties raised an additional $22m from retail investors, a figure that is not included in the NZX database.

Kathmandu's $40m placement in March 2018, which was underwritten, partly funded the acquisition of Oboz Footwear, the Montana based designer of footwear for backpacking, hiking and travel. Kathmandu also raised an extra $10m through an SPP, which was not underwritten or included in official NZX data.

Steel & Tube raised $21m through a placement at $1.15 a share in August last year but at the same time it announced a rights issue which raised $60m. The latter was available to all shareholders at $1.05 a share.

The Foley Family Wine placement at the end of 2018, which raised $19m at $1.48 a share, was to "partially fund the Mt Difficulty acquisition and new capital projects". There was no SPP or general retail offering associated with this placement.

The sixth largest placement was the $15m raised by Serko in August 2018 at $2.75 per share, a 3.2 per cent discount to the previous closing price.

Advertisement
Advertise with NZME.

A Serko statement revealed that: "The placement was well supported, attracting bids from a range of institutional investors across New Zealand and Australia, with institutions allocated stock, as well as strong participation from retail investors".

According to their 2018 annual reports, Serko had only 998 shareholders, Foley Family Wine had 920 and Ebos had 6959.

The larger number of Ebos shareholders clearly demonstrates why the NZSA has paid far more attention to the medical supplies group than the Serko and Foley Family Wine offerings, which didn't include SPPs.

The other smaller placements since the beginning of 2018 were by Chatham Rock Phosphate, Geo, Moa Group, Pacific Edge, QEX Logistics, ikeGPS, TruScreen, TeamTalk, Snakk Media and General Capital.

The largest rights issues over the same period, according to the NZX, have been as follows:

• Fletcher Building, $736m
• Tilt Renewables, $274m
• Gentrack, $90m
• Steel & Tube, $60m
• Seeka, $50m

The NZSA has been battling placements for years, including a Spark placement in 2001, GPG in 2006, The Warehouse in 2014 and Heartland on several occasions.

Hawkins wrote in 2013: "Recently we have seen increasing numbers of companies using a combination of 'placements' to institutional investors and Share Purchase Plans (SPPs) for small investors to raise additional funds. These include Argosy, Hellaby, DNZ and Metlifecare.

"The NZSA is becoming concerned at the way this trend is developing. Essentially a SPP allows an existing investor to buy up to $15,000 worth of new shares, regardless of their holdings. This is inequitable in two ways. Large shareholders may need a large amount to avoid dilutions and smaller shareholders are unreasonably disadvantaged. In addition, if you do not purchase shares you get nothing, but are diluted."

The NZSA is not one-eyed on the issue; it recognises that placements can be a legitimate option when companies are in trouble and need to raise new capital quickly. The Evolve Education announcement this week is an example of this.

However, Ebos is not in trouble and doesn't appear to need to raise $175m in a hurry.

Hawkins supported the Precinct Properties approach earlier this year and wrote: "The recent Precinct arrangement was a good idea. From memory they did a placement for $130m and then $20m in what was effectively a placement to all retail applicants of up to $50,000 depending on the original holding. The effect was that no one was diluted and to ensure this they expanded the offer slightly when demand was a bit higher than anticipated".

But one of the biggest issues with these placements is that they are often controlled by the underwriting brokers and discounted shares can be allocated to the underwriter's preferred clients, both institutional and retail.

Ebos shareholders with more than $250,000 worth of shares report that they were offered nothing in the recent placement while others, who had no Ebos shares, were given the opportunity to participate in the $18.70 a share offer.

The original Ebos placement was supposed to be for $150m but $175m was raised. Where did the additional $25m worth of shares go? Did they go to existing Ebos shareholders or to clients of the underwriting brokers who had no existing Ebos shares?

The NZX is struggling and it is very important that all participants feel that they are given equal opportunities if the domestic bourse is to attract wider individual participation.

Two decades ago there was a huge battle to introduce a Takeovers Code that would treat all investors equally. Several major brokers were totally opposed to the code but they were eventually overruled.

We need another major campaign to ensure that small shareholders are given a better deal when their companies are undertaking non-urgent capital raisings.

- Brian Gaynor is director of Milford Asset Management, which holds shares in many of the companies mentioned in this column on behalf of clients.

Subscriber benefit

The ability to gift paywall-free articles is a subscriber only benefit. See more offers by clicking the button below.

Already a subscriber?  Sign in here
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Business

Premium
Media Insider

The lawyer, the horse magazine and ex-TVNZ news chief's evidence – court orders retrial

12 Jun 05:12 PM
Premium
Media Insider

TV3 future in spotlight – could it be a Sky buy?; Shorty St eyes life support again

12 Jun 05:09 PM
Business

10 Kiwis lose $100k each to scams within three months

12 Jun 05:00 PM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.
Recommended for you
One survivor, at least 240 dead after Air India flight crashes
World

One survivor, at least 240 dead after Air India flight crashes

12 Jun 05:16 PM
10 Kiwis lose $100k each to scams within three months
Business

10 Kiwis lose $100k each to scams within three months

12 Jun 05:00 PM
Morning quiz: In computing, what does 'HTTP' stand for?
New Zealand

Morning quiz: In computing, what does 'HTTP' stand for?

12 Jun 05:00 PM
Trash sucks: A Norwegian city uses vacuum tubes to whisk waste away
World

Trash sucks: A Norwegian city uses vacuum tubes to whisk waste away

12 Jun 05:00 PM
Favouritism v loyalty in $75k Waikato Steeples
Racing

Favouritism v loyalty in $75k Waikato Steeples

12 Jun 05:00 PM

Latest from Business

Premium
The lawyer, the horse magazine and ex-TVNZ news chief's evidence – court orders retrial

The lawyer, the horse magazine and ex-TVNZ news chief's evidence – court orders retrial

12 Jun 05:12 PM

Defamation jury should not have heard expert evidence of Bill Ralston, says court.

Premium
TV3 future in spotlight – could it be a Sky buy?; Shorty St eyes life support again

TV3 future in spotlight – could it be a Sky buy?; Shorty St eyes life support again

12 Jun 05:09 PM
10 Kiwis lose $100k each to scams within three months

10 Kiwis lose $100k each to scams within three months

12 Jun 05:00 PM
Waikato distillery on mission to create 'iconic' New Zealand whiskies

Waikato distillery on mission to create 'iconic' New Zealand whiskies

12 Jun 05:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP
search by queryly Advanced Search