Bank of Queensland (ASX: BOQ) has announced it has successfully completed the institutional portion of its capital raising.
BOQ is one of Australia’s leading ‘regional’ banks with more than 180 branches throughout Australia. Unlike many other banks, many of BOQ’s branches are run by their ‘owner-managers’, who are effectively small business owners. Most of BOQ’s loans are mortgages.
BOQ’s Capital Raising
BOQ announced this morning it has successfully completed the $250 million institutional share placement portion of its capital raising.
The cash will be used to strengthen BOQ’s balance sheet, provide an increased buffer above APRA’s unquestionably strong Common Equity Tier 1 capital ratio benchmark and create additional capacity for BOQ to implement its strategic priorities.
BOQ’s transformation strategy update is planned for February 2020. The transformation is aimed to simplifying the business, delivering productivity gains & cost efficiencies and achieving sustainable profitable growth. It’s targeting a CET1 ratio range of 9% to 9.5% with some of the raised cash.
There will be approximately 32.1 million shares issued at a price of $7.78 per new share, which was the top of the bookbuild price range.
BOQ’s Managing Director and CEO George Frazis said: “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 implementation of our strategic transformation.”
BOQ is trying to raise a total $275 million. The institutional part was fully underwritten whilst the non-underwritten portion is non-underwritten. The capital raising was done at a 10% discount to the last closing share price of $8.64.
BOQ shares will recommence trading today but regular shareholders will get the chance to take part in the share purchase plan (SPP) until 20 December 2019 when the offer closes.
The bank is still anticipating lower cash earnings in FY20 compared to FY19 due to costs relating to regulatory compliance and increased technology investment.