BKI Investment Co. Ltd (ASX: BKI) recently announced to the market it is looking to raise up to $202 million from existing and new shareholders, to expand its investment portfolio.
The funds will be raised via the following:
Entitlement Offer – Up to $62 million, via a pro-rata offer of 1 new share for every 15 shares held by existing shareholders.
General Offer – up to $140 million, available to both existing and new shareholders. There is no maximum on the amount of shares you can apply for under this General Offer.
The offer is priced at $1.50 per share. This represents a 4.5% discount to the NTA as at 30 April, and a gross dividend yield of 7%.
New shares will also qualify for the final dividend, usually paid at the end of August.
Essentially this offer is open to everyone who is interested in buying shares in BKI Investment Co. Ltd.
Shareholders will receive details in the mail. For those who are not shareholders and are interested in the offer, more information can be found through BKI’s website, or Advanced Share registry.
As for whether shares in BKI make a good investment, let’s have a look…
The company was listed on the ASX in 2003. Today, it owns a diversified portfolio of 46 stocks worth around $1 billion.
It’s managed by Contact Asset Management who have family ties to, and are partly owned by, the hugely successful investment conglomerate Washington H. Soul Pattinson & Co. Ltd (ASX: SOL).
The portfolio is also run at low cost, with a management expense ratio of 0.17%.
Over the last 14 years, the company has produced a shareholder return of 10.8% per annum, including franking credits. This compares to the S&P/ASX300 Accumulation Index return of 10.4% per annum, including franking.
Investing in BKI is a simple way to own a large portfolio of dividend-paying stocks providing fully franked dividends.
In my view, the discount and the strong yield makes for a decent buying opportunity for income focused investors.