Thousands of BOQ investors have missed out on a lucrative chance to top up their shareholdings

Thousands of mum and dad investors have missed out on a lucrative opportunity to top up their shareholdings.

There’s a dark cloud hanging over what should be a triumphant moment for the Bank of Queensland, which has just acquired ME Bank in a $1.35bn deal.

Thousands of mum and dad investors have missed out on a lucrative opportunity to top up their shareholdings because offer documents arrived via snail mail after the closing date last week.

One estimate suggests the number could be as high as 70,000 of these retail investors, who have now missed out on nearly $120m in extra value for their portfolios. They have also had their holdings diluted without compensation.

Making matters worse, the two investment banks underwriting the capital raising — UBS and Goldman Sachs—have profited handsomely from the shortfall resulting from just half the eligible investors taking up their entitlement to discounted shares priced at $7.35.

Stephen Mayne

Institutional clients of the two banks have reaped a paper profit of more than $50m after they picked up the slack, retaining 37 million shares which traded as high as $8.92 this week. That’s on top of their fees, which are in excess of $21m and could end up exceeding $30m.

One self-funded retiree from Mission Beach revealed to City Beat that she lost the chance to make about $15,000 after receiving a thick pile of paperwork in the post on March 11, the day after the offer closed.

“I’ve just fallen through the cracks. I had an opportunity to make a little bit of money and they stuff up,’’ she said.

BOQ only lodged documents with ASIC on March 1, meaning there were just eight business days for people to respond, the bare minimum allowed by law.

Investor advocate Stephen Mayne is now seeking to have the offer reopened and has lodged complaints with ASIC and the ASX.

He’s also alerted Queensland’s two senators, Paul Scarr and Gerard Rennick, both of whom have signalled their concern.

In case this wasn’t enough, Mayne has already held talks with law firm Maurice Blackburn about a potential class action.

“It’s plainly unfair for everyone to see,’’ Mayne told your diarist on Thursday, noting that BOQ could have extended the offer closing date once it became clear the take up rate was so poor.

“This shows how the capital raising system is geared for the big end of town. Investment banks regularly rip off retail shareholders and boards are not educated enough to know how to avoid this.’’

Australian Shareholders Association chair Allan Goldin denounced the disenfranchisement of investors as “disgusting and disrespectful’’.

He said regulations need to be amended to require a longer window of time for offer documents to be delivered through Australia Post.

A BOQ spin doctor responded by stressing that “the acquisition of ME Bank is in the best interests’’ of shareholders but there was no expression of remorse.

She noted that priority postal service was used, which should have seen deliveries made in two to four business days, and cheques were accepted until Monday this week to account for mail delays.

An oversubscription facility also helped limit the dilution for retail investors.

As for the narrow window of time to respond, she described it as “the standard timeframe for these types of transactions…to ensure certainty of funding and reduce the market risk of the transaction’’.

That’s market risk for the investment banks, mind you, not the little guys.