Investors on Bucharest Stock Exchange pay significant premium to subscribe new Norofert shares
The price of preemption rights for the share capital increase initiated by Romanian organic fertilizer producer Norofert (NRF) surged by 8.2% on Tuesday morning, February 23, to RON 1.45, according to data on the Bucharest Stock Exchange.
The investors who buy preemption rights at this price are actually paying a premium of about 18% for the possibility to buy new shares issued by Norofert in the capital increase operation.
An investor needs 14.58 preemption rights to get one Norofert share at the price of RON 13.1161. For example, an investor who wants to buy 100 new shares will need 1,458 preemption rights, for which he will pay RON 2,114. He will also have to pay the subscription price of RON 1,311, which takes the total investment to RON 3,425.
The price of Norofert shares on the Bucharest Stock Exchange is currently RON 29.2. Thus, an investor can buy 100 existing shares directly from the market for RON 2,920.
The situation is unusual, given that the price of preemption rights plus the price of new shares is usually lower than the current trading price of existing shares. One reason for this is that the investors don't get the new shares right away and have to wait until they can sell them and the trading price of existing shares can go down in the meantime, which makes the investment in new shares riskier.
Norofert is one of the fastest-growing companies on the Bucharest Stock Exchange. Since the beginning of this year, the NRF shares have gained 125%.
(Photo source: BVB chart)