Heading into the final five days of the Commonwealth Brewery Limited (CB) initial public offering (IPO), only $38 million, or around 60 percent of the offer, was confirmed.
“What people finally come in with, I don’t know… I don’t know what the last week means to people anymore,” said Michael Anderson, President of Royal Fidelity Bank & Trust.
Anderson’s said that in his previous experience with IPOs, he has found that the lion’s share of the subscription is filled during the last week of the offering period.
So whether a surge of subscriptions will flood in this week, is anyone’s guess.
There have been some stirrings in the investment community as to how the offer was going, particularly in light of an offer made near the end of March by Royal Fidelity’s sister company, Fidelity Bank.
Fidelity Bank has offered 100 percent financing to government employees under a salary deduction plan, at rates as high as 16 percent. Many in the investment community have questioned the wisdom of buying stock with borrowed money.
When asked what advice the Royal Fidelity president may give to someone considering buying a security paying dividends of around 7 percent at an annual interest rate of around 16 percent.
“We never advise clients to borrow long term for investment purposes,” Anderson said. “So you need to be looking at borrowing to buy securities as a short term issue and to pay down the loan as soon as possible. Normally loans like this are to take advantage of opportunities that you otherwise would miss, knowing that you’re going to find some money to pay it back.”
