Preferential allotment

An issue of shares to a specific, identified group of investors rather than to the market.

The mechanism is legitimate and widely used for bringing in a strategic partner or for promoters injecting capital. It is also the route through which control can shift, or through which shares can be issued to connected parties at a price set by a formula rather than by demand.

Warrants issued preferentially deserve particular attention. They are typically paid for with a small upfront amount and converted later, which gives the holder a long option on the share price paid for by other shareholders' dilution.

Read who received the shares and at what price relative to the market.