If you have read the McGrath prospectus for the IPO - It clearly states the funds will primarily be used to liquidate existing shareholders. John McGrath pre IPO had 58.4 per cent of the business to 27 per cent post IPO. So yes - the CEO has sold out 50% of his holdings. Out of the $120m raised - only $7m is being used as working capital. Is that really enough cash to grow?
By the way the brokers did not "overvalue" the stock. If a share price rockets on IPO day, that is an opportunity cost for the brokers and the business as they could have raised at a much higher price. By McGrath falling today it suggests John McGrath / Shane Smollen squeezed every last penny our of retail and agent investors. They will most definitely be partying on the wharf tonight!
Some businesses go public to expand, grow and provide real value to the economy, others just use it has an exit strategy for existing shareholders. McGrath is the latter.
IPO, page-12
-
- There are more pages in this discussion • 48 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
