AFI Sets Maximum 124.65 Million Shares for On-Market Buy-Back Extension
Australian Foundation Investment Company Limited has extended its on-market buy-back facility for another year, updating broker details and increasing the maximum shares to be repurchased as part of ongoing capital management.
- On-market buy-back facility extended for 12 months
- Maximum shares to be bought back set at 124.65 million
- Broker updated to Morgans Financial Limited
- Buy-back to commence on 24 February 2025 and end 23 February 2026
- No shareholder approval required for the buy-back
Background and Context
Australian Foundation Investment Company Limited (ASX: AFI), one of Australia's leading listed investment companies, has announced an update to its on-market buy-back program. The company is refreshing its buy-back facility for a further 12 months, reaffirming its commitment to capital management and shareholder value enhancement.
Details of the Buy-Back
The refreshed buy-back facility authorises AFI to repurchase up to 124,654,944 ordinary fully paid shares, representing approximately 10% of its total issued shares of 1.25 billion. The buy-back will be conducted on-market through Morgans Financial Limited, the newly appointed broker for this program. The buy-back is scheduled to start on 24 February 2025 and conclude on 23 February 2026.
Importantly, the buy-back does not require shareholder approval, allowing the company to act swiftly and flexibly in managing its capital structure. The price to be paid for the shares is not yet determined, which is typical for on-market buy-backs where purchases occur at prevailing market prices.
Strategic Implications
This move signals AFI’s ongoing strategy to optimise its capital base, potentially improving earnings per share and providing support to the share price. By refreshing the buy-back facility, AFI maintains a tool to return excess capital to shareholders, which can be particularly attractive in a low-yield environment or when the company’s shares are trading below intrinsic value.
The appointment of Morgans Financial Limited as the broker may also reflect a strategic partnership aimed at efficient execution of the buy-back program. Investors will be watching closely how the buy-back unfolds over the next year and its impact on AFI’s share price and overall market perception.
Looking Ahead
With the buy-back facility refreshed and ready to deploy, AFI positions itself to respond dynamically to market conditions. The absence of a minimum buy-back number provides flexibility, while the substantial maximum cap underscores the company’s readiness to actively manage its capital.
As the buy-back progresses, market participants will be keen to assess the timing and scale of purchases, and how these align with AFI’s broader investment and distribution strategy.
Bottom Line?
AFI’s refreshed buy-back program sets the stage for active capital management through 2025, with investors eager to see its market impact.
Questions in the middle?
- At what price levels will AFI execute its buy-back purchases?
- How will the buy-back affect AFI’s dividend policy and future distributions?
- Could the buy-back signal confidence in AFI’s intrinsic valuation amid market volatility?
