Bank of Queensland has won strong support for its $440 million acquisition of most of Investec’s Australian business, securing $183m in cash from institutional shareholders.
The regional bank yesterday said 95 per cent of institutional shareholders took up their rights in the underwritten renounceable offer of new shares priced at $10.75, a healthy level of demand for a company raising money.
The shortfall of rights not taken up was sold by Goldman Sachs via a bookbuild at $12.05 per share, a small discount to the dividend adjusted theoretical ex-rights price (TERP) of $12.14.
Shareholders who didn’t take up their rights will be paid $1.30 a share, because the deal was structured in a way so they could “renounce” but still get some benefit.
TERP is the price a stock should theoretically trade at after an equity raising and the small discount suggested buyers were keen to get their hands on the spare stock. After being in a trading halted since Thursday at $12.62, BoQ shares came back online yesterday and closed up 2c at $12.64.
BoQ chief Stuart Grimshaw said he was pleased with the strong support and reiterated the Investec deal represented a “compelling” opportunity that fit with its strategy.
A share offer to retail shareholders opens today, targeting $217m.
BoQ on Friday agreed to buy Investec’s professional finance and asset finance and leasing businesses, which mostly services dentists and doctors.
Analysts have largely backed the acquisition, which includes a $2.4 billion loan portfolio and $2.7bn of deposits, boosting BoQ’s exposure outside Queensland and addressing its lack of organic growth.
But some have expressed concerns about the risk of Investec’s key management eventually leaving BoQ to retire or set up a rival operation.