Opinion
ASIC's overkill on 'stub equity' in private deals
Mark McNamara, Lee Horan, Mark Vanderneut and Cathy ChanThe Australian Securities and Investments Commission recently issued a consultation paper on the use of stub equity in public bids by private equity sponsors. It doesn’t like what it is seeing and is looking to clamp down.
For those not familiar, stub equity is a scrip alternative offered by bidders for the sale of your target shares. Target shareholders essentially elect to accept stub equity in the bidder’s holding vehicle as an alternative to taking all cash.
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