Sumitomo plans $9.4bn share sale to raise funds

Sumitomo Mitsui Financial Group, Japan's third-largest bank, set its planned share sale at $9.4 billion (Dh34.5bn) yesterday, a record for a Japanese financial firm and driven by the recent rebound in global financial stocks. The strong demand from domestic and overseas investors may also be an endorsement of the bank's aggressive attempt to grab market share at home by strengthening its securities business. Sumitomo Mitsui in May made a winning bid for Citigroup's Incorporated Japanese brokerage. Shares of Japanese banks have risen about 45 per cent in the last three months, recouping some losses from a six-year low earlier this year, as investors bet the worst of the international financial crisis may be over. "We're no longer at the stage where we don't know how bad the financial crisis will get," said Mitsushige Akino, Chief Fund Manager at Ichiyoshi Investment Management in Tokyo. "Investors are also responding well to the fact that Sumitomo Mitsui now has a powerful brokerage within its group. That is looking more and more positive as the stock market rebounds." Sumitomo Mitsui said it will raise 923.1 billion yen ($9.4bn) by issuing new common shares, a record for a Japanese financial company, according to Thomson Reuters data. The lender said in a statement it plans to sell 235 million shares at ¥3,928 each, a 9.7 per cent discount to their closing price of ¥4,350 in Tokyo on Friday. A spokesman for the bank said it expected its net fundraising to total ¥885bn after fees. The bank said in May it could issue up to 235 million new shares, including a total over-allotment of 30.6 million shares, given demand from investors. The fundraising comes just a month after the bank said it would pay ¥573.5bn for Citigroup's Nikko Cordial Securities unit and the US bank's stock and bond underwriting business in Japan. The bank also last month reported a $3.9 billion annual loss, its first in six years, hit by the economic downturn and losses on its shareholdings. Sumitomo Mitsui has said it is considering a tie-up between Nikko Cordial and Daiwa Securities, with which it has an investment banking joint venture. The details of any tie-up will be decided by the end of September, Sumitomo Mitsui has said. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .