QBE: Shareholder purchase plan update

High demand means a significant scale-back

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published April 5, 2012 3:40 pm AEST

QBE Insurance Limited (ASX: QBE) have announced details of how many shares existing shareholders will receive under the $150m Share Purchase Plan (SPP). QBE announced on 28^th March 2012, that it had received applications from 75,000 shareholders for much more than the $150m.

If you thought that meant the offer was going to be scaled back a lot – you'd be right. I've reproduced the table below from QBE's announcement showing how many shares each shareholder will receive, based on their holdings as at 27^th February 2012.

Number of shares on record date	"Potential allotment"
20,000 or more	1,402 (maximum allocation)
16,813	1,402 (maximum allocation)
10,000	834
5,000	417
2,000	167
1,000	17
50	4
20	2
10	1

The scaleback will be undertaken on the basis that each eligible applicant will be limited to a potential allotment of 8.34% of the value of their shareholding on the record date. If you held less than 10 shares, you'll receive none under the SPP.

Shares will be allotted to shareholders on Wednesday, 11^th April 2012, and refunds will start flowing back to investors the same day. Shareholders wishing to sell their shares can do so from Thursday 12^th April 2012.

Investors will be sent an allotment notice and refund advice on Friday 13^th April 2012.

The Foolish bottom line

Having applied for the maximum of $15,000, I was looking forward to receiving a very nice short term capital gain, but alas it's not meant to be. At least I'm quite happy that not all of QBE's 160,000 shareholders applied for shares.

Given the 32% increase in QBE's share price over the SPP issue price of $10.70, it's likely that some shareholders may elect to sell their shares on Thursday, 12^th April. I'll be hoping for some share price weakness and to pick up some more shares then.

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Motley Fool contributor Mike King owns shares in QBE. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool's disclosure policy.

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