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NAB Retail Shareholders May Stage Revolt
Retail shareholders in National Australia Bank (NAB) may stage a revolt and oppose the re-election of directors later in the year, in retaliation for the lender scaling back the retail share purchase component of its capital raising.
Stuart Wilson chief executive of the Australian Shareholders Association said that retail shareholders had been discriminated against, when NAB raised $2 billion, primarily from institutions in July, at what is now a deeply discounted price of $21.50 a share.
“This becomes an issue for the annual meeting; shareholders elect directors and expect fair treatment across the board. Clearly this has not happened with NAB, so we are considering if it warrants the removal of directors.” Mr. Wilson said.
Earlier in the week, NAB said that retail shareholders had made $2.6 billion in applications for new stock, but the lender only made $750 million in new shares available to them.
The purchase price for retail investors was the same as that for institutions and was at a steep discount to Wednesday’s closing price of $27.08. The method adopted by NAB contrasts significantly to that approach taken by rival ANZ.
Last May ANZ undertook a $2.5 billion institutional placement priced at $14.40 a share, which it ran simultaneously alongside a share purchase plan for retail investors. Though the lender reserved the right to scale back the portion allocated to retail investors if demand exceeded $350 million, it ultimately accepted $2.2 billion in applications, also priced at $14.40. ANZ stock closed at $19.97 on Wednesday.
A spokesman for NAB said: “There was a strong level of support from our shareholders for the Share Purchase Plan, so we understand that some people may be disappointed that they haven’t been able to subscribe to the level they would have liked. When setting the conditions for offers such as these, you cannot know in advance what the market response will be like.”
Mr. Wilson said equities were supposed to be equitable, but this was increasingly not the case. The ASA chief put the trend down to advisers getting a better fee for lining up institutions.
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