Following on from Macquarie Group Ltd's (ASX: MQG) announcement to buy a $US4 billion aircraft leasing portfolio from AWAS Aviation Capital Limited yesterday, eligible retail shareholders have the opportunity to take part in its share purchase plan (SPP).
After successfully raising $US500 million from an institutional placement, Macquarie said Australian and New Zealand shareholders on its registry at 7:00pm (AEDT) at 3 March 2015 will have the opportunity to buy up to $10,000 worth of shares.
The money raised will be used to fund the acquisition, strengthen the bank's balance sheet and, "accommodate future growth," the bank said in its announcement to the ASX this morning.
The purchase of Macquarie stock under the SPP will be the lower of:
- $73.50 per share – the same price institutional investors paid on 4 March 2015; or
- A 1% discount to the average weighted price in the five days up to the closing date for applications (that is, 24 March 2015).
The new shares will be ordinary fully paid and entitled to the dividend payment in respect of the year ended 31 March 2015.
With 95,000 shareholders expected to be eligible to apply, the question is: Should you take part?
Of course, every investor will have their own reasons for holding shares of Macquarie. Personally, I'm on record as saying that if you're investing for the long term, now probably isn't the time to buy shares.
Given that a majority of Macquarie's profits are cyclical in nature and likely to drop when the current bull market subsides, I believe investors will probably get a better buying opportunity sometime in the future.
But if you're more optimistic about the outlook for global markets and Macquarie – you may be inclined to participate in the SPP.
However, it's worth noting the current market price for Macquarie shares is $73.80 (only slightly higher than the SPP offer price) and with so many shares expected to hit the market, those looking to make an arbitrage profit (the simultaneous buying and selling of shares) might be disappointed.
