RETAIL and employee shareholders in Macquarie Group are sitting on a near-$250 million paper gain on a new stock bonanza after a surge in value of the investment banking combine's shares, which coincided with its latest capital-raising exercises.
Small investors have benefited from a 20 per cent discount struck against Macquarie's share price a month ago when the group initially tapped institutional shareholders for $540 million.
That successful placement at $27 a share was followed up with an even cheaper purchase plan offer to retail shareholders, which has proved even more popular than the one to fund managers.
More than 55,000 applications for new stock worth $670 million were received by Macquarie, which will honour all requests.
The total pledged by shareholders was three times more than the company and the market had been expecting and underlined the appeal of new equity raisings by corporates as they seek to take advantage of the recent recovery in share prices.
Macquarie's latest fundraising round will result in a maximum of 25.2 million new shares being issued by the group on top of the 20 million that were handed out to institutions after the private placement on May 1.
Taken together, Macquarie has now sucked in $1.2 billion of new capital from its widening band of investors. However, that has increased its equity base by 16 per cent in just five weeks and will put further pressure on its earnings per share as it seeks to recover from a 50 per cent fall in its 2009 net profits.
The latest tranche of new stock was priced at $26.60. Based on last night's closing price of $36.30 - a rise of 91 cents, or .5 per cent, on the day - shareholders who bought under the offer are already $9.70 ahead - a combined gain of $244 million. They are due to receive their new shares on Friday.
Yesterday's announcement coincided with Macquarie receiving a "please explain" query from the ASX, which was seeking a reason for the strong rise in its share price between Friday of last week and Monday.
It jumped $3.45 from $31.65 over that period and has since added another $1.20 following the corporate regulator's letter to Macquarie two days ago.
Macquarie responded by saying it was not aware of any unannounced market sensitive information that would explain the surge.
Its response was released to the market 20 minutes before it disclosed the success of the retail take-up of new stock and that it had raised $1.2 billion in all, aimed at boosting its global expansion plans.
Macquarie also used the announcement to say that its proposal to swap $500 million of cash due to senior executives as part of their past profit share into additional new stock was still being held up by the Government's changes to the tax charges on such employee benefits.
Macquarie lobbied the Productivity Commission last week as part of its investigation into executive pay, saying the planned removal of a worker's ability to defer tax on employee share schemes would have a "negative impact" on their future use.
It is understood that if the current tax breaks are retained, Macquarie's staff would be able to pay a lower tax rate on any gains made on the stock, thought to be 25 per cent.
