June 5 (Bloomberg) -- Deutsche Bank AG, Europe’s biggest investment bank, offered shareholders a discount of 24 percent to buy new stock as it sought to raise a total of 8.5 billion euros ($11.6 billion) to strengthen its finances.
Deutsche Bank will offer 6.75 billion euros worth of new shares to investors at 22.50 euros apiece, exceeding an original target of 6.3 billion euros, it said in a statement. The price compared with yesterday’s close of 29.72 euros in Frankfurt.
The announcement follows the 1.75 billion euros Deutsche Bank raised by selling shares at 29.20 euros to Paramount Holdings Services Ltd., an investment vehicle owned by Sheikh Hamad bin Jassim bin Jabr Al Thani, Qatar’s former prime minister.
Investment banks across the globe are weighing how to increase revenue as clients hold off on trades and costs from lawsuits and tighter regulation siphon capital. The capital increase will be Deutsche Bank’s biggest since selling about 10 billion euros of shares in 2010 to fund the purchase of Deutsche Postbank AG.
The company’s stock dropped 1.7 percent to 29.20 euros at 4:01 p.m. in Frankfurt. Other firms focused on investment banking, including Barclays Plc and HSBC Holdings Plc, also fell after the European Central Bank cut its deposit rate to minus 0.1 percent, potentially lowering revenue from bond trading.
Deutsche Bank’s sale of the 299.8 million shares allows investors to buy five new shares for every 18 they hold, according to today’s statement. The price is a 20 percent discount to the average value of the 18 shares at yesterday’s close and the five new shares worth 22.50 apiece, calculations by Bloomberg News show.
The price exceeded expectations and may partially “reflect some positive sentiment from investors about the wider economic environment,” Christian Hamann, an analyst at Hamburger Sparkasse who has a neutral stance on Deutsche Bank’s stock, said by telephone from Hamburg.
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Deutsche Bank’s common equity Tier 1 ratio, a key measure of financial strength, stood at 9.5 percent on March 31. It would have been 12 percent should the total capital it is seeking to raise have been included, it said in the statement.
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