K2A preferred shares listed

Real estate firm K2A Knaust & Andersson Fastigheter AB (STO: K2A PREF) has started its listed journey on the Nasdaq First North Premier on Thursday April 2nd 2015. With the IPO of preferred shares being oversubcribed, the maximum amount of 700 000 new preferred shares were issues at 250 SEK per share for proceeds of 175 million before issue costs. Post-IPO the company has some 4000 shareholders. In the short half-a-day session, the stock advanced 8.8 % to close at 272 SEK per share.

Shortly before the IPO, Johan Knaust, Olle Knaust and Christer Andersson all held 643200 ordinary class A-shares corresponding to 27,7% of all shares and votes. The remaining shares were held by Claes-Henrik Julander (12,5%) and Ludwig Holmgren (4,4%). Class A shares carry 10 votes each, so the three co-founders maintain firm grib of the company. Minor changes to their holding took place with Olle Knaust and Christer Andersson subscribing to a few thousand preferred shares. In the future it is possible that the company will list ordinary Class B-shares carrying one vote each.

K2A preferred shares are entitled to a yearly 20 SEK preferred dividend paid in quarterly installations. There are some guarantees for this (no profit distribution to other share classes, no issuing of new preferred shares) and an annual interest rate of 12% accruing on the unpaid dividend until the preferred dividend is received, should the company not have distributable cash to meet the preferred dividend in any given year. There are also some additional rights such as the right to subscribe for shares should new shares of any class be issued.

Preferred shares have no right to further profit distribution. If preferred shares are redeemed by the company, it would be done at 130% of the original subscription price (so 325 SEK for this batch). You can thusly argue that this instrument is closer to a corporate bond than to an equity certificate.

K2 has six active project locations and is seeking for more. Just recently subsidiary Svenska Studenthus ("Swedish Studenthouse") was granted permission to begin the construction of three blocks that will hosts 285 student apartments adjacent to Örebro University campus. The production process aims to minimize costs and risk with smallish high-standard houses. Report of Q1 2015 is expected on May 13th 2015. Acting financial advisor & book runner was Carnegie Investment Bank.