The Bank of Queensland Limited (ASX:BOQ) share price is trading lower on Monday after releasing an update on its equity raising…
The post Why the Bank of Queensland (ASX:BOQ) share price is under pressure today appeared first on The Motley Fool Australia. –
The Bank of Queensland Limited (ASX: BOQ) share price is trading lower on Monday afternoon.
At the time of writing, the regional bank’s shares are down 1% to $8.79.
Why is the Bank of Queensland share price trading lower?
This morning Bank of Queensland announced the completion of the retail component of its underwritten 1 for 3.34 accelerated pro-rata non-renounceable entitlement offer.
According to the release, the completion of the retail entitlement offer represents the final stage of the bank’s $1.35 billion equity raising. This included an underwritten institutional entitlement offer and institutional placement, which completed last month.
These funds were raised at $7.35 per new share, which was a 12.6% discount at the time.
Bank of Queensland revealed that it received strong support from eligible retail shareholders. It advised that applications totalled approximately $336 million, reflecting a take-up rate of approximately 50%.
In addition to this, approximately $72 million was applied for under its oversubscription facility, with each eligible retail shareholder who subscribed under the facility receiving the full allocation of new shares for which they applied.
However, this meant that the company only raised a total of $408 million from retail shareholders, which was below target. In light of this, 37 million (worth ~$271 million) will be allocated to the underwriters or sub-underwriters of the retail entitlement offer.
These underwriters are likely to be looking to offload these shares onto the market in the coming weeks, which could weigh on the Bank of Queensland share price.
With the funds raised, Bank of Queensland will now push ahead with its acquisition of Members Equity Bank (ME Bank) for $1.325 billion.
This acquisition is expected to be low double-digit to mid-teens cash earnings per share accretive, including full run-rate synergies in the first year (FY 2022). It is also expected to be cash return on equity accretive by over 100 basis points including full run-rate first year synergies.
The two businesses will have pro forma total assets over $88 billion, with total deposits of more than $56 billion.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.