Hello IQ team, when a company having a propose private placement, the EPS is diluted.
My understanding is that the total number of shares increased…and EPS will be reduced, which is not so good as I understood from the training.
Appreciate your views of sharing.
Thank you
Yes, at the same time, there is no cash call from retail investors from us.
Generally, as long the private placement is not a very significant percentage of the total amount of shares is generally fine. Or ideally not at a significant discount.
It would generally be a good sign if the placement is done to help the company’s growth.
There are also times when the company does a private placement because there’s not enough retail interest to be worth it.
Hope it helps.
Thanks for sharing Jieren Zheng.
I have terminology not familiar from your statement, appreciate if you can explain further:
1. May I know….what do you mean by….”there is no cash call from retail investors from us”.
2. Can you elaborate more on below statement?
“Generally, as long the private placement is not a very significant percentage of the total amount of shares is generally fine. Or ideally not at a significant discount.”
(I couldn’t get the real meaning from statement on above)
Thank you
Welcome.
1) Cash call is just a way of something that the company is asking money from us/others.
2) Private placement is a dilution as the number of shares are increased. But increasing 5% of total shares vs increasing 30% of total shares, one is very significant correct? Or if it is offered at a slight discount, there might be a dilution on price, if it is too huge (especially like Rights Issues), because you can’t subscribe you will be diluted a lot too.
Thank you Jieren Zheng, appreciate on your sharing!
Welcome :)
Thanks JR
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