The Irish Stock Exchange, now called Euronext Dublin, is pushing the Government for support to attract small investors. Many of these investors prefer keeping their savings in bank deposits rather than buying shares.
Balmoral International Land, previously known as Blackrock International Land, left the exchange over ten years ago. The company has made it hard for small investors to hold shares, raising concerns about why anyone would want to invest in shares.
Recently, a meeting at Arthur Cox’s office revealed that prominent business figures told small shareholders they were no longer welcome in the company. The McCann family controls the majority of Balmoral International Land, a property firm that was created from their earlier business, the fruit distributor Fyffes.
During an extraordinary general meeting, chairman Carl McCann moved to take the company private. This decision forced small shareholders, those with fewer than 25,000 shares, to sell their holdings at €10.50 each. These shareholders owned over 20% of the company before this meeting. While the company claimed that most of these investors held 500 shares or fewer, even that meant an investment of up to €5,250.
How can the actions of companies like Balmoral International Land impact the overall investor confidence in Euronext Dublin?
Interview with Sarah O’Connor, Financial Market Specialist
News Directory 3: Thank you for joining us today, Sarah. The recent developments at Balmoral International Land (formerly Blackrock International Land) have raised eyebrows among small investors. What can you tell us about the current situation?
Sarah O’Connor: Thank you for having me. The situation at Balmoral International Land is indeed troubling for small shareholders. The company’s decision to go private under the leadership of chairman Carl McCann effectively sidelined a significant portion of its investor base. This move compels those who own fewer than 25,000 shares to sell at €10.50 each, which many believe undervalues their investments.
News Directory 3: Why is the sell-off price particularly concerning for these shareholders?
Sarah O’Connor: The price at which shareholders are being forced to sell is notably lower than the net asset value of €18.72 per share and the recent market price of €12. This disparity raises serious questions about the motivations behind such an operation. For long-term investors who have shown faith in the company, being pushed out at a discount, especially during a period of recovery, feels like a betrayal.
News Directory 3: Recently, there was feedback from business figures about small shareholders. Can you shed light on their sentiments?
Sarah O’Connor: Yes, during the meeting at Arthur Cox’s office, prominent figures reportedly conveyed to small shareholders that they were no longer welcome. This is alarming because it undermines the very essence of a public stock exchange, which is to foster a diverse base of investors, including smaller ones who contribute to the market’s liquidity.
News Directory 3: What might be the implications of this situation for the Irish Stock Exchange, now known as Euronext Dublin?
Sarah O’Connor: Euronext Dublin faces significant challenges in attracting small investors, especially in light of these developments. There is a prevailing cultural preference among Irish savers to keep their money in bank deposits rather than investing in shares, primarily due to perceptions of volatility and the risks associated with equities. If companies like Balmoral International Land continue to prioritize the interests of major shareholders at the expense of smaller ones, it will only further deter this demographic.
News Directory 3: You mentioned companies like AIB and PTSB offering options to keep small investors engaged. How does this contrast with Balmoral’s recent approach?
Sarah O’Connor: Exactly. AIB and PTSB recognized the importance of maintaining relationships with smaller investors, providing them options to remain involved. This inclusive strategy not only helps in rebuilding trust but can bolster a company’s profile in the eyes of potential investors. Balmoral’s decision, in stark contrast, signals a retreat from inclusivity that may lead to reputational damage and a weakening of investor confidence.
News Directory 3: what advice would you give to small investors who are facing these challenges?
Sarah O’Connor: I would advise small investors to stay informed and actively engage with their investments. They should seek clarity on corporate governance and ensure their voices are heard. Additionally, exploring other investment avenues or forums could help them diversify their portfolios and mitigate some risks associated with such company-specific scenarios. It’s essential for them to know that their rights and interests matter in a changing market landscape.
Other companies like AIB and PTSB have also offered buyouts but provided options for interested investors to stay on. The McCanns and their advisors told those being forced out they were acting in the shareholders’ best interests. However, many long-term investors disagreed.
Investors questioned why they were being pushed out just as the company showed signs of recovery and profit from property investments. They also pointed out the buyout price was significantly lower than the net asset value of €18.72 per share and lower than a recent price of €12 for shares on the grey market. Why were they being forced out at a discount? That remains a puzzling question.
