The man who founded Sprott Inc. is selling a substantial portion of his shares.
Eric Sprott, who created the company and took it public in 2008, is selling 20 million shares at $3 each, generating $60-million. The shares are being sold through a bought deal that guarantees Mr. Sprott the full proceeds.
At the same time, Mr. Sprott is selling five million more shares through a private placement. Instead of selling these to new investors, he is unloading them to the company's 2011 employee profit-sharing trust – a rare move.
Since going public at $10 a share just months before the equity markets crashed in 2008, Sprott has struggled to revive its glory. The share sale is the company's first since its initial public offering, and Mr. Sprott recently announced plans to hand over daily management of his firm's funds.
Once revered as a magnificent investor, Mr. Sprott's image has been tarnished by rough fund performance since 2011. As of May 30, Sprott's flagship hedge fund was down 28 per cent in the past year.
After the offering, Mr. Sprott will own 25 per cent of the company.
A spokesperson declined to comment on Mr. Sprott's motivations, as well as his reasons for selling shares to the compensation plan, citing legal requirements for the company to stay quiet for a set period of time after the sale is announced.