Westpac (ASX: WBC) has given an update this morning about its large capital raising.
Westpac Banking Corporation, more commonly known as Westpac, is one of Australia’s ‘Big Four’ banks and a financial services provider headquartered in Sydney. It is one of Australia’s largest lenders to homeowners, investors, individuals (via credit cards and personal loans) and businesses.
Westpac’s Capital Raising
The big ASX bank announced as part of its FY19 result
that it would raising $2.5 billion from investors to provide an increased buffer above APRA’s “unquestionably strong” CET1 capital ratio benchmark of 10.5%.
The offer is expected to add approximately 46 to 58 basis points (0.46% to 0.58%) to Westpac’s CET1 capital ratio.
The raising is also designed to create flexibility for changes in capital rules and for potential litigation or regulatory action.
There are two parts to this capital raising, a fully underwritten $2 billion institutional share placement and a non-underwritten share purchase plan (SPP) which Westpac is aiming to raise around $500 million.
The offer price of $25.32 per new share is a 6.5% discount to the adjusted (to not include the dividend) last closing share price of $27.08. It’s a 8.1% to the adjusted five day average share price of $27.56.
This morning Westpac announced that it has successfully completed the $2 billion institutional share placement at the price of $25.32. All new shares were allocated to sophisticated and institutional investors in the placement bookbuild.
The trading halt is expected to be lifted before the market opens today.
Westpac’s new shares from the placement are expected to settle on 7 November 2019 with those new shares to commence trading on 8 November 2019. But they’ll have the ASX code of “WBCNB” because those shares aren’t entitled to the $0.80 per share 2019 final dividend.
Regular investors now have the chance to buy up to $30,000 of new shares in the share purchase plan (SPP) at a price of the lesser of either the placement price ($25.32) or the average share price of the five days up to the end of the SPP offer period, less a 2% discount.
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