The New Zealand Shareholders Association has criticised Heartland Bank over a $40 million of capital completed this month after its discounted share purchase plan closed more than three times oversubscribed.
The lender raised $20m selling shares to existing investors at $1.46 a piece in March, and the offer was scaled back because it received applications for $62m of shares. That added to $20m it raised via a placement to institutional investors at the same price in December.
NZSA's chief executive Michael Midgley said the capital raising was "yet another case of boards failing to treat all shareholders fairly" and many retail shareholders would have had their holdings diluted, potentially benefiting large institutional investors.
"Compounding matters, the company had not used a pro rata regime based on existing holdings when scaling applications back to only one-third of what was applied for," Midgley said.
"Ordinary shareholders will be wondering how many of the shares taken up by institutional shareholders have already been on-sold for a quick profit given the 20 cents rise in the share price since the placement."
