SMFG Sets Offer Price, Could Raise $9.38 Billion

 TOKYO -- Sumitomo Mitsui Financial Group Inc. said it has set the price for its new share offering that will raise up to 923 billion yen ($9.38 billion) due to strong demand from investors and optimism about its business strategy.

Japan's third-largest bank by assets said last month it would raise capital by issuing 235 million new shares, including an over-allotment option of 15.3 million shares, to bolster its capital base.

SMFG set the price Monday at 3,928 yen ($39.93) a share.

The public offering is Japan's largest equity deal this year, according to Dealogic, and the bank's first new share offering in more than three years. It comes as SMFG forges ahead with ambitious strategies following the proposed acquisition of Citigroup Inc.'s Tokyo brokerage operations.

Despite being initially pulled down over concerns of share dilution, SMFG's stock price has risen by about 30% from 3,110 yen on April 10, the day after it disclosed its share-issuance plan, helped by a recovery in the stock market and more clarity on the bank's strategy. On Monday, the stock closed down 6.9% at 4,050 yen.

Last month, SMFG said it will buy Nikko Cordial and some parts of Nikko Citigroup effective Oct. 1.

SMFG's agreement to buy Citigroup's Tokyo brokerage operations for 545 billion yen also helped investors understand how it intends to spend the cash.

The fund raising will also help the bank shore up its capital base after it recently posted dismal earnings due to losses on equity holdings and an increase in bad loans. SMFG posted a net loss of 373.46 billion yen in the year ended March 31.

Payment for the public offering is due June 22. After fees and expenses, the bank expects net proceeds of 885 billion yen.