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Why you should pay attention when investment trusts raise new money


The number of investment company IPOs (initial public offerings) has diminished over the years. However, the quality of these IPOs has increased, and is supplemented by a growing number of “secondary” issues (additional blocks of shares), usually offered at an attractive discount to the share price.
Sometimes these share offerings are available to direct investors through platforms such as Interactive Investor and Hargreaves Lansdown. But the private investor is often shut out, even when they are already shareholders.
The Stock Exchange imposes rules on “pre-emption rights” (the obligation to offer existing holders the first bite of the cherry) in secondary issues. But these restrict the terms of share issuance to non-holders rather than give holders automatic preference. These restrictions can be loosened by shareholders at large in a general meeting ie, by the big shareholders. ....

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