Shares in Bank of Queensland fell yesterday as expected after the bank raised the first $250 million of its $275 million capital raising.
The shares fell 5.7% to $8.15 after touching a low of $7.85 (close to the issue price of $7.78).
That was the lowest price since mid-2013 which was to be expected given the size of the issue. The shares topped $8 very quickly and those institutions who supported the issue ended up with a modest profit on the day.
The placement will result in the issue of approximately 32.1 million new fully paid ordinary shares in BOQ at a price of $7.78 for each new share. This represents the top of the bookbuild price range, according to the bank.
BOQ’s Managing Director & Chief Executive Officer George Frazis said in a statement: “We are pleased with the strong support we have received from investors.
“The funds raised will further increase BOQ’s buffer above APRA’s “unquestionably strong” benchmark and provide BOQ with additional capacity to support the implementation of our strategic transformation.”
New Shares under the Placement are expected to settle on Friday (November 2019). New Shares are expected to be issued and commence trading on the ASX on 29 November 2019. The retail offer will start next week.
At least ten analysts have put out notes on BOQ following its $250 million institutional capital raising from institutional shareholders.
At least one didn’t like the idea of the issue.
“We continue to believe BOQ has plenty of work to do in terms of streamlining its operations and improving customer-facing technology,’’ Morgans analyst Azib Khan wrote in a note to clients. He reduced his target price from $8 to $7.20 and maintains a ‘reduce’ rating.
“Unless these issues are resolved, we believe BOQ’s revenue growth will remain challenged and underlying cash earnings per share growth will underperform the major banks.”
He also expects the bank to cut its half-yearly dividend early next year. In Monday’s announcement, the bank said it was no longer planning to offer a discount on its dividend reinvestment plan share price.
