Monash Absolute Investment Company has announced it will offer shareholders an equal access share buyback of up to 10 per cent of its ordinary shares.
The buyback, which would be offered on an equal access basis, would be take place in the first quarter of the 2019 financial year, with the price set at a five per cent discount to pre-tax net tangible asset backing (NTA).
Additionally, existing shareholders would be offered an opportunity to participate in a share purchase plan (SPP) of up to the same quantity of shares as the number bought back.
Monash’s co-portfolio manager, Simon Shields, said the move was aimed at improving outcomes for shareholders by addressing two interrelated issues.
The firm’s board decided the key priorities were to reduce the discount to NTA of the company’s share price, while at the same time increasing liquidity in the stock.
“We reviewed a number of options and decided that creating a liquidity event via a buyback and share purchase plan will help reduce the discount to NTA. Prior to the announcement, the shares were trading at 82 cents, a 17 per cent discount to the 98.5-cent pre-tax NTA, which is not ideal for shareholders,” Shields said.
“There is no reason why the shares should now more closely track the NTA performance, given the liquidity we are now providing via our innovative solution.
“And the fact that we are offering the equivalent number of shares available in the off-market buyback to new and existing shareholders at the same time means there will be sufficient liquidity for these shareholders to make additional purchases.”
