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Capital Markets

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Categorized | Banks, Equities

Caixabank unveils €1.4bn share sale for BPI bid

Posted on September 22, 2016

The new logo of CaixaBank is seen next to that of La Caixa on top of their headquarters in Barcelona June 30, 2011. CaixaBank, which is 81 percent-owned by Spain's second-biggest savings bank La Caixa, will float on July 1 and plans to grow its market share in Spain organically as well as through acquisitions, while also eyeing further overseas expansion. REUTERS/Albert Gea (SPAIN - Tags: BUSINESS) - RTR2OAI2©Reuters

Spain’s Caixabank has announced plans to raise up to €1.4bn from an overnight share sale to fund its takeover bid for Banco BPI, Portugal’s fourth-largest lender by assets.

The Barcelona-based bank had initially planned to fund the acquisition organically and from disposals. But its managers changed their minds after discussions with regulators on Thursday and having digested the US Federal Reserve’s decision not to raise interest rates, according to a person briefed on the matter.

    The share sale, which leaked before the announcement and was first reported by Bloomberg, was being done via an accelerated bookbuilding that was handled by JPMorgan Chase and Morgan Stanley. Shares in Caixabank fell 3 per cent.

    The Spanish bank is selling 585m shares, equal to about 10 per cent of its total capital, at a price of €2.24-€2.35 each — a discount of as much as 4.5 per cent to Thursday’s close.

    Portugal’s market regulator told Caixabank on Wednesday to launch a mandatory takeover bid for the 55 per cent of BPI it does not already own, after shareholders in the Portuguese bank lifted the main obstacle to a deal.

    More than 88 per cent of BPI investors voted to remove a voting-rights cap on Caixabank’s 45 per cent stake in the Portuguese lender, which had stopped the Spanish bank from launching a full takeover offer.

    If Caixabank’s bid is fully accepted, it would cut its core capital ratio to about 10.5 per cent — below its target of between 11 and 12 per cent.

    For some months, the future of BPI — which has a market capitalisation of €1.6bn — has been clouded by a dispute between Caixabank and Isabel dos Santos, the billionaire daughter of Angola’s president, who owns 20 per cent of BPI.

    Ms dos Santos abstained in Wednesday’s vote, allowing the voting cap to be lifted, and she is now expected to sell her stake to Caixabank.

    To proceed with the deal, the Spanish bank will have to adjust its offer price to the latest six-month average, but that is unlikely to increase the cost significantly.

    Another key to unblocking the deal impasse was a proposal by BPI to sell 2 per cent of its Angolan operation, called BFA, to a company controlled by Ms dos Santos.

    That would cut BPI’s stake in BFA to less than 50 per cent and help the Portuguese bank comply with EU rules requiring it to reduce its exposure to Angola.