Bank of Queensland share price falls after $275m raise is revealed

The Bank of Queensland share price has fallen significantly after announcing a now almost-completed $275 million capital raise to the market last week.

Bank of Queensland share price: a play-by-play

First it was Westpac and now it’s the Bank of Queensland (ASX: BOQ) tapping the capital markets.

Like Westpac: the Bank of Queensland just recently announced that it was looking to raise $275m in new capital – split between a fully-underwritten $250m placement to institutional investors (now completed) and another (yet to be finalised) $25m from a share purchase plan (SPP) to eligible investors.

Unsurprisingly and just like Westpac – BOQ’s shares also fell steeply once the stock resumed trading post-raise trading halt.

The day prior to the announcement of this raise, for example, the Bank of Queensland shares traded hands at the $8.640 mark. A trading halt wouldn’t slow matters much, nor see bearish investors obstructed: once the stock opened after the completition of the institutional placement, it dove to a low of $8.070 per share during the day.

Since then the stock has managed to fall further, with BOQ currently trading at $7.780 per share – some 9.9% lower than they did prior to the cap raise announcement.

Practise trading Australian bank stocks with an IG demo account now

Details of the capital raise

The Bank of Queensland articulated two primary reasons for the $275m capital raise. Specifically, it was noted that the funds would be used to:

‘Strengthen BOQ’s balance sheet, provide an increased buffer above the Australian Prudential Regulation Authority’s (APRA) "unquestionably strong" Common Equity Tier 1 (CET1) capital ratio benchmark and create additional capacity for BOQ to implement its strategic priorities.'

After all, as part of the bank’s FY19 results, it was noted that BOQ’s Common Equity Tier 1 ratio stood at 9.04% – somewhat below APRA's 'unquestionably strong' requirement.

In saying that and speaking of the outlook, BOQ noted during its FY19 presentation that the bank remained appropriately capitalised. Indeed, as was further explicated, 'the Offer is expected to add approximately 80 to 88 basis points to BOQ's Level 2 CET1 capital ratio.'

The outcome at a glance

Finally, examining the specifics behind the capital raise may go some ways to explain the bearish reaction from investors. Looking at the potential dilution to existing shareholders for example, it was noted that:

'The placement will result in approximately 32.5 million New shares issued at the Floor Price, representing approximately 8.0% of BOQ's existing issued capital.'

Ultimately, the $250m institutional portion of the capital raise was completed at the top-end of the previously stated book-build price – with 32.1m New Shares issued at a price of $7.78 per share.

Speaking to the yet-to-be-finalised SPP $25m portion of the raise, George Frazis – BOQ’s CEO – said that a 'SPP booklet with further details is expected to be sent to Eligible Shareholders on or around 3 December 2019.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

See opportunity on a stock?

Don’t miss your chance. Try a risk-free trade in your demo account, and find out whether your hunch could have paid off.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance. Upgrade to a live account to take advantage.

  • Trade a wide range of popular global stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform, when it matters

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.