Italy’s Monte dei Paschi di Siena (BMPS.MI) launched on Monday a new share sale, its seventh in 14 years, seeking to raise up to 2.5 billion euros ($2.4 billion) to fund its latest turnaround plan.
MPS, which is owned by the state following a 2017 bailout, is offering shareholders 374 new shares for each three shares owned at a price of 2 euros each.
On Friday Italian market regulator Consob set the shares’ reference price at 2.0630 euro each, stripping out a theoretical price for subscription rights of 7.8371 euros each.
The stock rose sharply in early trade on Monday, triggering an automatic trading suspension. By 0704 GMT it gained 7.6% at 2.219 euros each.
The rights failed to trade and were indicated down at 6.27 euros each.
The stock has more than halved in value over the past five days, bringing the overall drop so far this year to nearly 90%, Refinitiv data showed.
MPS’ shrunken market value has capped the discount the bank was able to offer on the new shares well below what is customary for this type of offers, resulting in a valuation which is at premium over healthier peers.
Given the high risk of unsold stock, MPS has struggled to secure underwriters, managing to sign a guarantee contract only at the very last minute.
To secure backing it agreed to pay 125 million euros in fees and had to find investors who agreed to buy half of the up to 900 million euro portion of the capital increase which cannot be covered by the state.
($1 = 1.0290 euros)