13 January 2014

Buying shares in Rangers: A how-to for fans

Guest contributor Derek Miller lays out a few different options for supporters looking to purchase shares in Rangers during 2014...

Many fans who didn’t invest in Rangers during the IPO may still be looking to buy shares but may also be unsure exactly how to go about this.

The simplest way is to open an online account with a sharebroker (such as Hargreaves Lansdown or TD Waterhouse) and make a live purchase in RIFC plc. The major downside though to a live share purchase through many of these brokers is that this generally incurs a commission charge of around £12. 

As many fans may not be looking to make a large one-off purchase of £500-£1000 worth of shares. A more realistic option may be to make a regular monthly purchase of around £20-£30 worth. The problem with making this kind of monthly purchase is that a large chunk (around 40-60 percent) of your funds will be eaten up by the £12 commission charge.

However, there is an account available through the Bank of Scotland that may offer a cheaper alternative for fans looking to make a regular monthly purchase. The same account is also available through the Halifax brand if you prefer.

How these accounts work is that on a particular date of the month you contribute a set amount by direct debit from your bank account e.g. £20. Then around 3 working days later they will purchase that amount of shares for you at whatever the share price is on that day.

As you are not making a live purchase this incurs much lower charges than the £12 you would have to pay for a live trade. The admin charge for this is only £2. The minimum monthly contribution you can make with this account is £20.

You do not need to be an existing bank account holder with the Bank of Scotland or Halifax to sign up for one of these accounts. Any bank account with direct debit facilities is all that is required. If you currently have an account with another bank, such as Clydesdale or Barclays, that will be fine.

To give you an indication of how many more shares you could receive in comparison to paying the live purchase commission charge. Contributing the minimum £20 a month through the sharebuilder account will incur a £2 admin charge and around 10p in stamp duty leaving you with £17.90 to buy shares with. At the mid-December share price of 35p you would have received approximately 51 shares. (I have used the RIFC plc mid-December 2013 share price of around 35p in these calculations. The current share price is approximately 20 percent lower.)

Making this same contribution through a live purchase will incur an £11.95 commission fee (plus around 4p stamp duty) and you would only have received around 23 shares.

As you can see this type of account may offer a better alternative for fans looking to steadily purchase a small amount of shares on a regular basis.

You can also use this account to make one-off purchases too. So if you only wanted to buy around £50 or £100 worth of shares on a one-off occasion that is also possible. You do not necessarily need to sign up to a monthly direct debit plan to purchase shares at the low admin rates offered.

You will also receive the voting rights on any shares you purchase through this account. However, you will need to contact the bank in advance of an AGM and request a proxy voting form.

Just to illustrate exactly what signing up to a regular monthly share purchase like this could mean in terms of Rangers fans having a greater level of ownership: Signing up to a £25 per month direct debit would get you around 65 shares per month or 780 per year.

If every Rangers season ticket holder signed up to this (around 35,000) then in a year’s time we would own more than a further 27 million shares. With around 65 million currently issued this would represent fans owning a further 41 percent of the shareholding. Add this to the 12 percent we currently hold and we would far and away be the company’s major shareholders.

This is obviously an over-simplification of the situation as it does not take account of factors such as changes in share price throughout the year and availability of shares on the market at any given time. There is also the prospect of the current shareholding being diluted by further share issues if a new investor, such as Dave King, invests in the company.

However, it does go some way to showing what can potentially be achieved by every fan making a small purchase every month.

For more details on the Bank of Scotland’s sharebuilder account please contact them direct on 0845 606 1188.

The article originally published on 13th January also featured the Royal Bank of Scotland’s Monthly portfolio builder account. However, this account is limited to purchasing shares in FTSE 350 companies so RIFC plc shares are currently unavailable via this particular account.

There are no such limitations however with the Bank of Scotland sharebuilder account.

If any fans know of other ways to purchase shares in RIFC plc at low admin rates please get in contact and we will happily feature further articles on this.

Please note: The value of investments, and the income from them, can fall as well as rise, and you may not get back the full amount you invest. 

The content of this article does not intend to provide, nor shall it constitute, an offer or provision of financial, investment or other professional advice. You should obtain advice from a qualified financial adviser before making any investment decision.