The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Well I must be one of the lucky ones who has been offered the opportunity to subscribe for shares at a price to be decided by them after the event...
Am I missing a detail here? Why would I want that?
I have enough UKW that I'm not looking to top up on the open market. I also have my own policy of topping up these types of investment whenever a raise annihilates part of the premium, so I'll do the same now (in moderation), thankful that I don't have to pay any dealing fees on corporate actions (on small money that makes a difference too). Should I have just bought when it was lower? Absolutely, but I can't predict the future. I'm sure my strategy isn't for everyone but that's the reason why I'll top up now whilst not buying earlier.
Yes, it's those other parts of the issue mentioned by Mike that I was referring to but I don't know enough detail to know if I'm missing something! I'm happy to invest in these whenever they do an issue as at least it removes some of the premium and I love the dividends. For info, I subscribed for well over my (very small) allocation with SEIT and got the lot, so I think they're happy to take our investment.
One thing I don't understand about this issue is that there appears to be an offer to the non-invested market at the same price. Rights issues make sense as a way to be fair to investors whilst also raising capital in a dividend stock - sure the price drops but investors are compensated by getting the option to buy at a cheaper price than the rest of the market. There is no reason for the share price to drop to the offer price (although I know it sometimes does) as you can't simply sell and buy back at a guaranteed price. That logic seems to be destroyed when the same price is offered to those not currently invested. Why not just do a bigger rights issue? I don't mind the raises but this doesn't seem like an appropriate way to safeguard shareholder value. Am I missing something?