BARITA Investment Limited’s owners may stand to see a hefty gain on the value of their shareholdings upon completion of the public offer, which they hope will raise over $1 billion.

The investment house is offering the ordinary shares at $2.50 per stock unit when only at end-September the shares were valued at $1.65 per share, reflecting

According to the company’s financial statements, on August 5, 2009 the board of directors of Barita authorised the issue of bonus shares of 338,111,520, which was financed from the capitalisation of $519 million of retained earnings, reflecting a share price of $1.53 per share.

With the current amount of shares fully issued now standing at 405.7 million shares, it means that the bonus issue increased their shareholdings fivefold.

Interestingly, the existing shareholders had paid 6.2 times that to buy 987,526 of its own shares from a former director.

On the other hand, when buying Barita Unit Trust Management (BUTM), after buying out the former director, it exchanged one share in Barita for every 4.14 shares in BUTM.

Then BUTM shares were valued at $3.59, translating into a price of $14.86 per Barita share.

Importantly, however, the value of the 405.7 million shares at the end of September 30, 2009, was set at $667.6 million — $1.65 per share.

The company made $98.6 million net profit for the 12 months to September 30, 2009, which means that after the share issue its earnings per share (EPS) for the period would be 16.83 cents, while at $2.50 the price-to-earnings (PE) ratio would stand at 14.84.

As it stands now, Rita Humphries-Lewin, with 340.2 million shares is the majority shareholder of Barita. She will see her stake drop from 84 per cent in the company to 55 per cent.

But she will stand to see $42.5 million come back to her should all her personal shares involved in the offer are taken up.

Barita intends to offer 200 million preference shares at $3 a share to raise $600 million and hopes to raise another $441.5 million by selling a total of 200 million ordinary shares as follows: 160 million to the public for $2.50 a share; 30 million to clients of Barita at $2.30 a share; and 10 million to staff — six million to staff and four million to directors — at $2.25.

Twenty million of the ordinary shares will be issued by existing shareholders.

This Public Offer is intended to bolster and strengthen the capital base of the company while helping the investment house expand its business.

Areas of expansion in the near will be focused on Individual Retirement Schemes, more diversified Unit Trust & Mutual Funds Offerings, product offerings in foreign currencies and upgrading IT facilities to meet the new demands, according to the prospectus.

The company has also reserved 50 million ordinary shares for a staff and directors share purchase scheme, planned for June 2010.

The dividends on the preference shares will be paid on a six-monthly basis in June and December of each year.

Applications for preference shares should be for a minimum of 10,000 shares and multiples of 10,000 shares and for ordinary shares should be a minimum of 1,000 ordinary shares and multiples of 1,000 shares.

The application will open at 9:00 am on December 7, 2009 and will close on December 15, 2009, at 4:30 pm.