Tuesday 24th October, 2017
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Deutsche Bank seeks $8.6bn selling shares at discount

Deutsche Bank seeks $8.6bn selling shares at discount

Deutsche Bank AG said it will raise 8 billion euros ($8.6 billion) by selling stock at a 35 percent discount to last week’s closing price as Germany’s largest lender seeks to shore up its finances and boost growth.
 
The company will issue 687.5 million new shares at 11.65 euros apiece, it said in a statement Sunday, in-line with the firm’s March 5 announcement on the planned sale. The offer compares with the stock’s closing price of 17.86 euros on Friday, and is almost 41 percent lower than where the stock traded when Bloomberg first reported that the bank was weighing a capital raising. Existing investors will be able to acquire one new share for each two they now hold.
 
The sale, which will run from March 21 through April 4, will be the fourth capital infusion for Deutsche Bank since 2010. Chief Executive Officer John Cryan, who had previously said he didn’t want to tap shareholders, reversed course this month after the shares almost doubled from their September low and Deutsche Bank was unable to find a buyer for a consumer banking unit.
 
“Appetite for the issue is going to be helped by the 35 percent discount,” Chris Wheeler, an analyst at Atlantic Equities, said Monday on Bloomberg Television. “That’s a traditional way banks raise capital, by having a deep discount.”
 
Even after slipping this month ahead of the capital increase, the stock is still up 80 percent from an intraday low on Sept. 30, amid renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings.
 
“The environment for the share sale is almost perfect, given the expectation of higher interest rates and buoyant equity markets,” Ingo Frommen, an analyst with LBBW who has a hold recommendation on the stock, said ahead of Sunday’s announcement.
 
The offer price is 26 percent less than the theoretical value of the shares excluding the rights, known as TERP. That compares with a 38 percent discount on UniCredit SpA’s 13 billion euro rights offer.

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