Renson is a regular reader of this blog and does not mince his words when asking his questions. The other day he left a message in the comments section asking why British American existing shareholders are listing and whether they will offload their shares after the listing and thus dilute the price of the stock.
Well, I answered the question of what they will do with the money here. But today, I will tackle the issue of existing shareholders and whether they will be able to sell the stock after listing. Before you and I buy the stock and become shareholders, there were eight other owners of the company.
Renson is worried that once the company is listed, they may sell and dilute the price. Well dude, as the Americans say, ain’t gonna happen. They will not be able to reduce their total shareholding to below 51% for a period of two years.
The existing shareholders have signed a lock in agreement with the company. The lock in agreement states that they cannot be able to reduce their combined shareholding to less than 51% for two years. The agreement has been filed with the CMA and is thus legally binding.
This means that for two years, each cannot sell their shares below a certain numbers. They cannot thus be able to offload the shares en masse and thus trigger a price fall. So Ren, relax dude. For more details read page 28 of this document here which details the shareholders, how many shares they have and the quantity they can be able to sell within that period.
In any case, none of them seems to be in a hurry. I have had the pleasure of talking to one of them Benson Wairegi and you can bet on one thing. He believes in the company and is not in it for the short term. The man has steered the company for 20 years!
And as Inflation hits 15%, it is time to think critically about your money. If you have cash lying somewhere in a bank remove it and invest. Otherwise, if you were saving to buy a car, you will end buying a tuk tuk.