Hili Ventures is currently making a very aggressive bid to buy back its shares of its subsidiary, Hili Properties from its investors in what investors have described as “daylight robbery”.
Hili Properties issued an Initial Public Offering of its shares in November 2021 at €0.27 per share. The stock went public in the following of month of December and has been going down its initial sale value ever since. Hili Ventures is the majority shareholder of Hili Properties with up to 75% of the shares.
In February of this year, Hili Properties demanded the suspension of trading of its share on the public stock exchange and issued a buyback offer to its investors. The stock closed in the public market at €0.19 and Hili Ventures Ltd, the majority shareholder of Hili Properties wants to buy back the shares at just €0.24 per share. Hili Ventures is currently doing the Comino project.
Hili Properties increased its value to a net-asset t0 €0.32 according to its financial report. According to its public listing, its latest NAV was at €0.29 making its market value worth around €116 million, higher than its actual market value of around €77 million at €0.19 per share: the stock’s final closing price. The company’s financial reports also show increasing revenue and profitability, and their assets are set to appreciate with the Comino project. The group also has a real-estate portfolio worth in total around €200 million.
Hili Ventures is buying back its stock at a lower price than it initially offered, even as the company’s revenues and profitability continue to rise: this shows the company is confident in its stock and seeks to extract value from its shares. Although this strategy may ultimately be beneficial for the company’s books, it will hurt investors and also reduce trust that investors have in the company as reported in previous press reports in The Shift News and Times of Malta.
This aggressive move appears to be legal and acceptable to the regulator, but it is also a rare instance on the local stock exchange where a publicly listed company willingly harms its investors by undercutting their investment through a share buyback to extract maximum gain and value from its shares. A more commonly practiced way on the Malta Stock Exchange which is used by companies to extract value out of shareholders is by diluting their stock.
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