From Fonsai to Mps, to mention only the most recent examples. Over and over again, small savers have been trapped in hyper-dilutive capital increases that have wiped out the value of their holdings. A "phenomenon" that Consob has been following for some time and on which it has now launched a new market consultation to seek a solution which will close on 30 September. Already in April 2010, Consob had conducted a first public consultation, followed by two consultations, of a more technical nature and therefore reserved for industry, held in April 2011 and in April 2014. In the current consultation, the Authority proposes a solution which he considers "the only one" potentially capable of completely resolving the price anomalies.
Trying to simplify, hyperdilutive increases are those capitalizations that are characterized by the issue of a much higher number of shares than existing ones at very discounted prices. This generates, in the words of Consob, "anomalies in the trend of the market prices of shares" after the detachment of the option right which, especially in the first few days, were greatly overvalued.
With this type of recapitalization, Consob explains, there is an increase in the quantity of shares traded on the market since the shares, deprived of option rights, are worth much less than they were before the increase and therefore "for the same monetary amount invested” the number of shares purchased “increases considerably”.
Consob identifies several factors at the basis of these anomalies: 1) the optical effect that deceives small savers; 2) a lower unitary value of the shares; 3) speculation with investors who could bet on the uptrend; 4) the derivative effect (closure of call options and coverage of short positions); 5) the need for ETFs to replicate the performance of the index.
Again due to the conditions of extreme dilution of the increases, a shortage of securities is generated during the increase which prevents market dynamics from rebalancing share prices.
The solution proposed by the Market Authority is thus the introduction of "an additional delivery window for the new shares on each day of the offer period", without waiting for the close of the increase as is the case now, "so as to remedy the shortage of securities and allow the realignment of the price to correct values" (in technical jargon "rolling"). A solution proposed in 2010 but then set aside due to "significant implementation costs and times" which weighed heavily on the depository intermediaries but which today, as mentioned, Consob defines as "the only one" among those subsequently analyzed potentially capable of completely resolving the anomalies of price.
On the other hand, hyperdilutive increases are no longer a simple problem for Piazza Affari. But almost a "plague". From 2009 to July 2014, 23 hyperdilutive increases took place, equal to a quarter of the total recapitalisations, with which 11,4 billion euros were raised. “The most significant anomalies – said Consob – occurred with reference to a small number of cases, the last of which is the increase promoted by Banca Monte dei Paschi di Siena”.
Consob calculated that the record for price anomalies was set by Tiscali in 2009 (+579%) while important increases such as that of Fonsai in 2012 and Mps in 2014 recorded peaks of 334% and 67% respectively . The "anomaly" concerned a value of 656 million, a value given by the volumes traded multiplied by that part of the price deemed anomalous. A sort of "phantom" value that made someone burn and others gain.
