QBE, one of Australia’s largest insurers, has become the latest company to embark on a major equity raising, tapping the market for $1.2bn through JPMorgan and Goldman Sachs.
QBE says it is taking “pre-emptive and decisive” action to lift its regulatory capital, as coronavirus causes economic and investment market uncertainty.
Shares are being sold at $8.25 each, a 9.4 per cent discount to their last closing price of $9.11.
The company’s market value is $11.92bn.
Shares traded at more than $15 this year before the coronavirus outbreak in Australia.
The insurer told the market it was embarking on a placement and share purchase plan and trade would resume by Wednesday.
It comes after the Australian Regulatory Prudential Authority recently issued guidelines for financial companies on paying dividends.
QBE had $3.1bn of debt at December with a debt-to-equity ratio of 38 per cent.
The institutional placement to raise $1.2bn is fully underwritten and the non-underwritten share purchase plan will secure about $120m.
In a term sheet sent to investors, QBE said the raise was on the back of market uncertainty and it would provide flexibility to return the company’s gearing closer to the top end of its internal 25 to 35 per cent benchmark over the next 12 months.
It would also assist with capitalising on growth opportunities, particularly in the international division.
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