Rights issues and how to use them: Flexigroup

The FXL entitlement offer will provide the Income First model portfolio with an instant paper profit but not all rights issues are this successful.

Summary: Flexigroup’s entitlement offer means investors can buy shares well below market value and the funds raised are set to be used wisely for the purchase of Fisher and Paykel. In general, it’s worth understanding whether an issue price is below the share price and whether the funds will be put to good use.

Key take-out: The Income First model portfolio will take up its entitlements, buying an extra 521 shares and making paper profit of a little over $300. This takes FXL towards an 8 per cent weight in the portfolio.

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