Jul 2013 Financial News

Permell disappointed with First Citizens allocation

Jul 15, 2013

Minority shareholder rights advocate, Peter Permell, yesterday expressed “profound disappointment” with the Government’s allocation of First Citizens shares to individuals even as he praised Finance Minister Larry Howai for his role in getting the Initial Public Offering off the ground with a year of his appointment. In a news release, Permell noted that Government had allocated 70 per cent of the 48,495,665 shares on offer to local institutional and corporate investors.

According to Permell: “I regret to express my profound disappointment with the reported share allocation formula approved by the Minister and his Government in which institutional and corporate investors are afforded preferential treatment or guaranteed 33,946,966 shares, 70 per cent or of the shares to be issued while individual investors who include the Group’s hard-working staff, loyal customers and the patriotic citizens of this country will collectively only be eligible for 14,548,699 shares or 30 per cent.

In fact if one excludes the staff, individual members of the public will only be eligible for 7,274,350.” The share rights advocate said that what was “more disappointing and possibly borders on insulting” is the paltry “50 shares” that has been approved as the ‘guarantee minimum allocation’ per individual when the issue has always been not whether the IPO will be oversubscribed but what will be the order of magnitude of the oversubscription.

He also pointed out that there may be an issue with the allocation of shares to the bank’s employees. “According to the prospectus there are only about 1,664 permanent employees each of whom will be given the right to buy a specified minimum allocation of shares in an amount of 500, but each employee could purchase additional shares up to 5,000, and the shares purchased would be subject to a discount of ten per cent of the Offer price.

“Thereafter, employees can purchase shares in excess of 5,000 at the offer price. “This appears to be an error since 15 percent of the offer is 7,274,350 shares and if one divides this amount by the total number of employees (1664) assuming they all apply, the maximum number of shares that could be allocated per employee is 4,371.”

Permell called on the Finance Minister to explain the rationale for the allocation to individuals to “all patriotic citizens of T&T who wish to meaningfully participate in this IPO” and at the same time questioned whether former First Citizens employees would be eligible for the 500 share minimum allocation and ten percent (or $2.20) discount on the subscription price of $22.

He also suggested that giving T&T nationals a guaranteed minimum allocation of a 500 shares may have been more equitable. In the news release, Permell commended Howai for the “key role that he has played in implementing the launch of First Citizens Group IPO today within less than one year of his appointment as Minister of Finance.

And Permell noted that Howai has been able to achieve that “which was announced by his predecessor from as far back as the September 2010 budget statement but which hitherto appears to have been ‘elusive’.” The First Citizens IPO opens today and closes on August 9 with the shares expected to list on the local stock market on September 16.


Source:
Trinidad Guardian
Monday July 15, 2013

http://guardian.co.tt/business/2013-07-15/permell-disappointed-first-citizens-allocation