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NAB (ASX: NAB) has increased the size of its share purchase plan (SPP) by $750 million above its original target of $500 million after investors demonstrated sizeable interest in the raise.
The increase brings the total amount raised by NAB in the SPP $1.25 billion, meaning approximately 88 million new NAB shares will be issued on Tuesday, 2 June.
The SPP was offered to approximately 615,000 eligible shareholders and was taken up by around 115,000 shareholders for a total value of $2.9 billion.
Valid applications received represented a participation rate of approximately 25 per cent of eligible shareholders, with an average application amount of approximately $18,500, at an issue price of $14.15 per SPP share.
The increased SPP comes on top of a $3 billion institutional placement, bringing the total amount raised by the bank over the last month to $4.25 billion.
"We were pleased to provide all of our eligible shareholders with the opportunity to participate in this offer," says NAB Group CEO Ross McEwan.
"Together with our recently completed institutional placement, the capital raised through the offer will assist us to manage through a range of possible scenarios related to the COVID-19 pandemic, including a prolonged and severe economic downturn.
Because of the deluge of interest NAB was forced to scale back valid applications under the SPP and was applied having regard to the pro rata shareholding of eligible shareholders who applied for SPP shares subject to a minimum allocation of 176 SPP shares (being $2,490.40 worth of SPP shares).
Eligible shareholders who applied for $2,500 or less of SPP shares will not be subject to this scale back and will receive the amount applied for.
The $4.25 billion raise should steady the bank during the COVID-19 pandemic and resulting financial crisis.
The company announced its planned raise at the end of April in conjunction with the release of its 1H20 financial results that demonstrated a dive in cash earnings of more than $1 billion, equating to a 51.4 per cent drop year-on-year.
NAB said the impact of Covid-19 was reflected at a group level, with statutory profit for the half down 37.6 per cent to $1.3 billion compared to a $2.1 billion profit at the end of 2H19.
Revenue declined by 4.4 per cent during the half compared to 1H19 reflecting market-to-market losses the liquids portfolio within its Markets and Treasury business.
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