Bank of East Asia places new shares to Sumitomo Mitsui

SMBC's stake will rise to 9.5%.

According to Maybank Kim Eng, BEA announced that it will place 111.6m new shares to Sumitomo Mitsui Bank Corporation (SMBC), its current 3rd largest shareholders. After the placement SMBC's stake will rise from 4.73% to 9.50%.

Here's more from Maybank Kim Eng:

Caixa Bank (the largest shareholder) ‘s stake will be diluted from 17.0% to 16.1%, while Guoco’s stake will be diluted from 15.0% to 14.2%.

Placement price is HKD29.59, only 0.4% discount to latest closing price, and BEA would raise HKD3.3b of new capital via the placement.

Implication: The newshare placement is not totally unexpected. To recap, in early Nov12 SMBC obtained approval from US Fed to increase its stake in BEA to 9.9%. At that time there were already speculations that BEA may place new shares to SMBC.

At that time, SMBC stated that it had no intention to obtain substantial influence on BEA, and will not seek more than one place in board of directors.  Under our estimates, the placement would enhance BEA’s core and total CAR by 80bps each. Its core/total CAR would improve from Jun12’s 9.7/13.2%, to 10.5/14.0%.

We also believe that the new share placement help strengthening the stake of Caixa Bank and SMBC (widely believed to be on CEO David Li’s side), and diluting Guoco, which seems interested in taking over BEA at some time.