The bank plans to use the heavily discounted capital raising to build its regional banking businesses, and position itself as the “first alternative” to the four major banks.
The capital raising comes after the bank emerged from a sharp fall in profits, and annual results showed Bendigo’s bad and doubtful debts shot from $23.1 million to $80.3 million, with most of the lending problems coming from its commercial property portfolio.
The Australian newspaper reports today that the bank is set to finalise the fully underwritten institutional and retail placement, which was priced at $6.75, a 15.4 per cent discount to the stocks $8.13 price last week.
The equity raising comprises a 1-for-12 accelerated non-renounceable entitlement offer of ordinary shares to eligible retail and institutional shareholders to raise about $173 million, and a placement of ordinary shares to institutional investors to raise the remaining $127 million.
The Allens team worked “around the clock” with Bendigo, it said. Partner and co-head of equity capital markets, Robert Pick, led the team with partner Jon Webster, alongside senior associate Mark Malinas.
Mallesons partner, Jonathan Hamer, and senior associate, Will Heath, advised the underwriters on the deal.
bank efficiently on all aspects of the transaction in what was a very compressed timetable for a prospectus offering,” Pick said.
The bank’s chief executive, Mike Hirst, who recently replaced veteran boss of 21 years, Rob Hunt, said the capital raising would give the bank the flexibility and capacity to take advantage of emerging market opportunities.
“In Bendigo and Adelaide Bank I see an organisation with a sound credit quality, a balance sheet with a low level of risk, and a high quality capital base.
“This places us in an ideal position to grow our businesses in a sustainable way, while continuing to meet and exceed the expectations of our customers and creating real wealth for our shareholders,” Hirst said.
He added the last financial year had presented unprecendented challenges for all Australian banks, with a deteriorating credit cycle and rapid fall in official cash rates impacting financial results.