iEnergizer (LON: IBPO) shares are now down 90% or so over the past two trading days. This is not, as we might imagine, the sort of trading performance shareholders would like to see. The cause of, the reason for, this fall is simply that the listing is going to disappear. There's also pretty much nothing to be done about it- there is not going to be some revival here as a result of a reversal of the decision. Such delistings require the approval of 75% of the shareholders - one share one vote basis. As the dominant shareholder has over 80% and wants this to happen then, well, that's what's going to happen then.
As we reported last week about iEnergizer when the shares fell 80% in the one day - that is before Monday's more than 40% fall again - there is a significant value to liquidity in a stock. In any investment in fact. Being able to get out of the position if circumstances change is valuable. Remove that liquidity and the value of the share or stock - or even any investment - thereby falls. This is why property often has a higher nominal return, just as one example, because the property market is notoriously lumpy. You cannot sell out of property overnight as you can a liquid share.
iEnergizer share price from London Stock Exchange
As IBPO announced on Friday: “the Directors believe that the continued quotation on AIM is unlikely to provide the Company with significantly wider access to capital; the considerable cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM are, in the Directors' opinion, disproportionate to the benefits to the Company; “ There is also the point that with an 82% dominant shareholder then there's not much liquidity anyway.
The move therefore will be to a matched bargain basis for trading the shares. Which is what has collapsed the share price there - it will simply be incredibly difficult to move out of any major position in IBPO. That increases risk and reduces value. This is just how it works, lower liquidity increases risk thereby reducing vale.
