Standard Bank is looking to raise R2-billion in Tier I capital through a proposed preference share issue.
“The group is looking to raise cost-effective Tier I capital as part of its capital management programme together with providing the company with funding for strategic initiatives.
“The group is aiming to raise approximately R2-billion preference share capital, but if pricing is acceptable, an issue size of R2,5-billion may be considered,” Standard Bank said on Monday.
It said the proceeds will enable the group to return ordinary shareholder equity via share buy-backs and/or special or increased dividends. It will fund possible empowerment transactions to facilitate Standard Bank’s attainment of Financial Sector Charter direct ownership points.
“For Standard Bank to achieve the bulk of direct ownership points in terms of the Financial Sector Charter –based on the current estimated value of South African banking operations — a black empowerment transaction of approximately R4-billion would be required. Depending on the structure of such a deal, preference share capital raised creates flexibility in designing funding alternatives,” the banking group — one of South Africa’s so-called “big four” — added.
It said that following an informal assessment of investor interest in an issue of non-redeemable, non-cumulative, non-participating preference shares, the group will embark on a roadshow on Monday regarding a potential issue of these instruments to institutional investors.
“Assuming sufficient investor demand for such an issue, a private placement will be made during June, followed by a public offer, based on a minimum subscription amount of R100Â 000, to open in mid-June and close in early July,” it stated. — I-Net Bridge