Shares & Derivatives
Share Placements
By Investment Moats  •  April 26, 2012
Share placements are issue of shares to a particular group of potential investors. Typically, these investors are not existing investors. This is probably because the existing substantial share holders do not want to do a rights issue which would mean putting in their own cash. (Think how China Merchant Pacific,  whose owner owns 81% of it doesn’t want to do a rights issue because they will end up paying it mainly by themselves) The company that issues usually do this to shore up their balance sheets to
  • Fund future expansion. They see potential to buy assets that can create a higher return on investment
  • Pay off debts. Debt interest rates get too expensive. Their net asset value have gone down such that their debt to asset ratio worsen, this could eventually affect their credit rating which will affect future debt purchase
  • Cost of equity is cheaper than cost of debt. ...
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By Investment Moats
Investment Moats is set up by Kyith Ng and have been around since 2005. He aims to share his experiences making sense of money, how money works and ways to grow his money. It hopes that by sharing his experiences, both good and bad, season investors can advice and critique his decisions and new investors can learn from them and find their own style ...
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