Community Bank shares list today
Community Bank shares will become tradeable for the first time today when Bendigo Stock Exchange (BSX) begins a trial listing of two community companies.
Shares in Lang Lang/Pearcedale and Doncaster East community banks will be able to change hands when the BSX lists their shares at 11am today.
There are currently 84 of the Bendigo Bank franchises across Australia and all are expected to have the opportunity to seek listing on the internet-based exchange.
“The listing rules acknowledge the special nature of the Community Bank companies,” said BSX Managing Director, Mr Frank Dunphy
“There are restrictions on purchasers to ensure that the majority of each company’s shares remain held within that community, thereby preserving the motive that makes Community Banks successful in the first place – local ownership.
“But otherwise the market will function as a fully-fledged market in publicly-owned shares.
“The open market situation will provide buyers and sellers with flexibility and transparency in a regulated market environment which will establish a fair value for these companies.
“While the very nature of Community Bank says that most shares will be tightly held, situations occur in which shareholders need to be able to realise the value of their holding – maybe they are leaving the district, or perhaps they simply need their capital returned to them for other purposes.
“The few off-market trades to date have been for par value of the shares, which does not reflect the fact that many of these companies are now making substantial profits and are paying excellent dividends to their shareholders.
“Upwey, for example, paid a ten per cent dividend for F02, which would have been matched by few, if any, publicly-owned companies.
“It is reasonable to suppose that the market would value Upwey’s shares at higher than par. This would provide the original investors with fair reward for their initial commitment and would reflect the value of the shares to the buyer.”
Mr Dunphy said other advantages included the establishment of a half-yearly reporting regime for Community Bank companies, which would instil confidence in the investor base, and the affirmation that a community-based investment represents a “real” investment and “real” value.
Shares in Community Financial Services Victoria Ltd (Lang Lang/Pearcedale) and Doncaster East Financial Services Ltd will commence trading at 11am today. BSX runs a half-hour trading window from 11am each day. “We already have several buyers and sellers queued up waiting for the market to open,” said BSX Broker Michael McCartney.
Bendigo Bank managing director Rob Hunt said: “We have always maintained that Community Bank is co-operatively spirited but must also be based on sound commercial principles to ensure its sustainability.
“Bendigo has always intended to facilitate a trading mechanism for shareholders and with 84 local companies now operating, this is the time to test the waters.
“Given that a growing number of local companies are now making sustainable surpluses, there is a need to protect investors by establishing a rigorous, transparent process for evaluating and realising the value of their investment.”
