Sumitomo Mitsui Trust Holdings Inc. (8309) fell in Tokyo trading after the Japanese bank said it will raise 94 billion yen ($932 million) in an overseas share sale to fund strategic investments and asset expansion.
Shares of the Tokyo-based lender declined 5.3 percent to 432 yen at 9:36 a.m. local time. Japan’s fourth-biggest bank by market value will sell 217 million treasury shares to foreign investors for 433 yen each, it said in a statement today. That’s a 5 percent discount on yesterday’s close of 456 yen.
The sale follows Sumitomo Mitsui Trust’s repurchase of 467.3 million shares from the government in March to complete a bailout repayment plan. It said then that it will cancel 250 million of those shares and keep the remainder as treasury stock for the time being.
“The sale is essentially equity financing and will result in dilution,” Toyoki Sameshima, an analyst at BNP Paribas SA in Tokyo, wrote in a report yesterday.
Sumitomo Mitsui Trust expects net proceeds from the share sale of 89.8 billion yen, it said in the statement to the Tokyo Stock Exchange. Shares of the bank have climbed 44 percent this year, outpacing a 34 percent gain in the benchmark Topix Index (TPX), which dropped 2.3 percent this morning.
The company was formed from the combination of Chuo Mitsui Trust Holdings Inc. and Sumitomo Trust & Banking Co. in April 2011. Chuo Mitsui received the taxpayer bailout after being crippled by bad loans in the 1990s following the collapse of the country’s asset bubble.
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