Why choose Lanstead as a shareholder and why enter into an accompanying Lanstead sharing agreement?

Lanstead aims to be a supportive longer-term equity investor; a “stickier” type of institutional investor. Lanstead shares the upside of its investment with the company to incentivize growth and continues to work closely with companies and their advisers.

How does Lanstead invest?

Lanstead becomes a shareholder in a company by participating in placings either alongside other institutional investors or as a sole placee.

How does the Lanstead sharing agreement work?

When Lanstead becomes a shareholder, by purchasing shares in a placing, it also enters into a sharing agreement designed to share the upside in company growth based on a benchmark price (BMP). The sharing agreement provides the opportunity for a company to benefit from positive future news flow.

Is Lanstead entitled to invest monthly at a fixed discount to the prevailing company share price from month to month?

No. Lanstead will be issued and will immediately pay for all the shares it purchases in a placing. The number of shares issued to Lanstead is fixed and does not change.

Does Lanstead benefit by the share price being lower than the BMP, rather than going higher than the BMP?

No. Lanstead makes more money the higher the share price rises. Through the sharing agreement Lanstead shares the majority of the upside as a company’s share price appreciates. The sharing agreement is an incentive for the company’s management to perform, thereby benefitting all shareholders including Lanstead.

The outcome for the company is contractually clear and the value of Lanstead’s investment is greater if the company’s share price is higher.

It is important to note that Lanstead shares the majority, but not all of the upside in any future company share price appreciation. The bottom line is that Lanstead makes more money as the share price rises and does not derive any advantage from a decline in the share price.

Can Lanstead trade its shares?

Lanstead has a demonstrable track record of being a longer-term supportive shareholder to its investee companies. Like any institutional investor, Lanstead only invests in companies where it can see strong potential for share price appreciation.

Lanstead is free to buy and sell shares just like any other shareholder and it is required to disclose movements of >1% as a significant disclosable shareholder. Unlike other shareholders, Lanstead has an uncapped commitment through the sharing agreement to remit amounts each month to the company based on the prevailing share price. Therefore, whilst Lanstead may take a profit along the way (like any shareholder) and cover its downside risk on the investment (just like any shareholder), Lanstead also has an incentive (unlike other shareholders) to maintain a significant on-going shareholding because of its uncapped exposure on the amounts due to the company over the 18 months of the sharing agreement as a company’s shares appreciate.

What are examples of companies that have benefited from having Lanstead as a shareholder with a sharing agreement?

ImmuPharma (AIM), AFC Energy (AIM) and Blackham Resources (ASX) are some examples of companies that have benefited from having Lanstead as a shareholder with a sharing agreement in recent times.