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February 24, 2017

UniCredit's Record $13.8 Billion Rights Offer 99.8% Subscribed

Source: Bloomberg Terminal NSN OLVFEA6KLVR4 <GO>

  • Capital Research, Aabar said to fully subscribe to the offer

  • Italy’s biggest bank seeks to fund CEO’s turnaround plan


By Sonia Sirletti, Dinesh Nair and Ruth David

(Bloomberg) -- UniCredit SpA, Italy’s biggest bank, said shareholders committed to 99.8 percent of its 13 billion-euro ($13.8 billion) rights offering, supplying the lender with fresh funding vital to Chief Executive Officer Jean Pierre Mustier’s turnaround plan.

UniCredit secured pledges to buy 1.6 billion new shares, the Milan-based lender said in a stock exchange statement on Thursday. The bank will seek buyers for the rest of the shares from February 27 to March 3.

“The success of UniCredit’s rights offer marks a turning point for the bank, showing that Mustier was able to convince investors that his plan is able to revamp the bank,” said Mario Russo, an analyst at North Square Blue Oak Ltd. “It’s also a positive step for the country’s banking sector, making it more interesting.”

Mustier, who joined in July, plans to use most of the funding to absorb losses on soured loans that will be sold at a discount. The rest will help finance the exit of thousands of employees and build up the capital defenses of the globally systemic lender. The successful cash call may also help restore confidence in other Italian lenders saddled with bad loans.

The bank’s main shareholders, Capital Research & Management Co., a Los Angeles-based fund manager with about 6.7 percent, and Aabar Investments, which owns about 5 percent, exercised all their rights to maintain their stakes, according to a person with knowledge of the matter.

A spokesman for UniCredit declined to comment on individual investors. A spokeswoman for Capital Group was not immediately available to comment when contacted by Bloomberg in London. A representative for International Petroleum Investment Co, which is the parent of Aabar, did not have an immediate comment.

UniCredit was down 1.4 percent in Milan trading at 12.27 euros as of 9:51 a.m. The rights offering allows subscribers to purchase new shares for 8.09 euros apiece.

Shareholders in Italy were among those who showed interest and feedback from foreign investors was positive, said other people. The rights issue, the largest ever in Italy, was fully underwritten by a group of banks including Morgan Stanley, UBS Group AG and JPMorgan Chase & Co.

UniCredit’s successful cash call contrasts with lenders such as Banca Monte dei Paschi di Siena SpA, which faces a state rescue after its plan to raise as much as 5 billion euros privately failed. Initial public offerings by Banca Popolare di Vicenza and Veneto Banca also didn’t attract investors, leading to state intervention. Italy is seeking permission from the European Commission, the EU’s executive body, to use state funds to aid Monte Paschi and it may spend as much as 20 billion euros assisting troubled banks.

Related ticker:

UCG IM (UniCredit SpA)

To contact the reporters on this story:

Sonia Sirletti in Milan at;

Dinesh Nair in London at;

Ruth David in London at

To contact the editors responsible for this story:

Elisa Martinuzzi at

Cindy Roberts, Dan Liefgreen

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