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Shares in Monte dei Paschi plunge 14% after capital raise
Global Banking & Finance Review®
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MILAN (Reuters) – Shares in Monte dei Paschi di Siena plunged 14% on Friday, triggering an automatic trading suspension, after the state-owned bank successfully completed a 2.5 billion euro ($2.4 billion) capital raise.
MILAN (Reuters) – Shares in Monte dei Paschi di Siena plunged 14% on Friday, triggering an automatic trading suspension, after the state-owned bank successfully completed a 2.5 billion euro ($2.4 billion) capital raise.
Monte dei Paschi said late on Thursday its new share issue had been 96.3% subscribed, with underwriters taking up the remaining 93 million euros.
Monte dei Paschi has been forced to price the new shares at an unusually small discount, because of its shrunken market value compared with the cash call’s size.
Analysts had forecast the shares would fall once they started trading to bring valuation multiples in line with those of peers.
($1 = 1.0233 euros)
(Reporting by Valentina Za; editing by Agnieszka Flak)
A capital raise is a method used by companies to obtain additional funds by issuing new shares or securities. This process helps businesses finance operations, pay debts, or invest in growth opportunities.
Equity shares represent ownership in a company and entitle shareholders to a portion of the company's profits, typically paid out as dividends. They also provide voting rights in corporate decisions.
Market value refers to the current price at which an asset or company can be bought or sold in the market. It reflects the perceptions of investors and can fluctuate based on supply and demand.
A trading suspension is a temporary halt in the buying or selling of a security on an exchange. It can occur due to significant news, regulatory issues, or to prevent market manipulation.
Underwriters are financial institutions or individuals that evaluate and assume the risk of issuing securities. They help companies raise capital by guaranteeing the sale of new shares or bonds.
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