QMS Media Ltd (ASX: QMS) has dudded its retail investors by raising $20 million in capital via a placement and not offering existing shareholders a Share Purchase Plan (SPP).
That's rather surprising given of the company's 1,190 shareholders; just 103 held more than 100,000 shares in the company at the end of June 2016. The remaining 1,087 shareholders each hold less than 100,000 shares, and 500 shareholders hold less than 10,000 shares.
QMS Media is an outdoor advertising business, and recently raised $20 million to fund the acquisition of an 80% stake in Out and About Marketing and Media (OAMM) – a leading provider of in-bowl digital stadium and other advertising at key sporting stadia across Australasia, a 50% equity stake in LIVE Docklands, which holds the rights to several digital advertising assets within Melbourne's Etihad Stadium and a 20% stake in Sportsmate Australia – a developer of sporting apps across a number of popular sports including AFL, NRL, cricket, rugby, soccer, NFL and NBA.
While the acquisitions make sense, given they tie in with QMS Media's existing outdoor advertising assets, the manner of raising capital should irk retail shareholders.
The good news I suppose is that the raising is only relatively small given QMS Media has a market cap of $327 million, and the new shares were issued at only a small discount to the last closing price of $1.09. QMS Media issued 19,047,619 new shares at $1.05 each.
A small discount and raising size means retail investors haven't been diluted too heavily, but the least QMS Media could have done was to offer existing shareholders the option of buying discounted shares under a share purchase plan (SPP).
As many readers will no doubt know, we would much prefer companies raise capital in a manner that is fair for all existing shareholders, rather than offering cheaper shares to a select few institutional investors. We have called out several companies in the past for not offering SPPs, or raising capital in a manner that dilutes the holdings of retail investors.
That includes Onevue Holdings Ltd (ASX: OVH) in November 2016, iCar Asia Ltd (ASX: ICQ) in July 2015 and Nanosonics Ltd (ASX: NAN) in March 2015.
