HSBC shares jumped over 5 per cent today after its massive £12.9 billion rights issue received a robust response from investors, with leftover shares sold quickly.
Some 96.6 per cent of shares were taken in the offer and bankers sold the remaining 172.7 million shares not taken up - or the "rump" - early today at 448 pence each in London and $51.83 each in Hong Kong, people familiar with the matter and dealers said.
HSBC raised £12.5 billion net of fees and expenses, which are expected to top £400 million.
It is one of the biggest rights issue ever and will help HSBC weather losses in its troubled US business and restore its capital advantage over rivals after an extended global financial crisis.
It will boost its ability to grab profitable business from banks in trouble and help it pursue bolt-on acquisitions in Asia and other emerging markets.
The "rump" was almost five-times covered, one source said. The placing was at about a 2 per cent discount to the price when it closed, and the shares subsequently extended their early rally.
"The markedly improved global investor sentiment post-G20 and the slew of strong US data in recent days have helped HSBC to a great extent," said Alex Tang, research director at Core Pacific-Yamaichi International. Tang called the response to HSBC's cash call "excellent".
Its Hong Kong stock closed up 5.3 per cent at HK$52.05 after hitting $52.3, its highest level since it announced the cash call on March 2nd. The shares have soared 70 per cent from the 14-year lows of HK$30.55 hit four weeks ago.
Reuters