By Valentina Za
MILAN – Unsold shares left with underwriters in Monte dei Paschi di Siena’s (MPS) capital increase are expected to total less than 100 million euros ($100 million), two people close to the transaction said.
A group of eight banks led by global coordinators Bank of America, Citigroup, Credit Suisse and Mediobanca, plus London-based fund Algebris have agreed to absorb up to 857 million euros in unsold stock.
MPS is tapping markets five years after an 8 billion euro bailout that handed the state a 64% stake.
To offset expected losses given the small discount MPS offered on the new shares due to its shrunken market value in relation to the cash call’s size, the underwriters are being paid much higher fees than normal.
Shares in MPS closed down 1.6% at 1.93 euros on Friday, below the 2 euros at which the new stock is being sold.
The banks have also demanded that MPS secured sub-underwriting accords covering at least half of the 900 million euro private portion of the capital increase. Based on its MPS stake, the state will contribute 1.6 billion euros.
Sub-underwriters will step in once the share offer’s subscription period ends on Monday, picking up unexercised rights in the following two days.
The underwriters themselves will then buy whatever is left after that.
The two sources said that amount was expected to total less than 100 million euros.
MPSCEO Luigi Lovaglio raced against the clock to secure sub-underwriting commitments prior to the offer’s launch.
Leading the sub-underwriters is France’s AXA, MPS‘ insurance partner, which has committed up to 200 million euros.
The same amount has been pledged in aggregate by three holders of MPS‘ junior bonds — asset managers Pimco, Melqart and BlueBay.
Sums varying between 20 million and 30 million euros are coming from businessmen Denis Dumont, Andrea Pignataro, asset manager Anima Holding and the same Algebris.
The Treasury has also relied heavily on support from banking foundations which are under its direct oversight and are historic investors in Italian banks.
On Friday, Padua-based Cariparo joined a string of fellow foundations in Italy’s wealthy north that have committed in total just over 30 million euros this week towards the MPS‘ capital raise, the sources said.
That broadly matches an earlier sub-underwriting commitment by four foundations in MPS‘ Tuscany home region.
($1 = 1.0028 euros)