Morgan Stanley and Dresdner Kleinwort stuck with 62.1 per cent of new equity
HBOS shares closed down 6.2 per cent at 264.50p yesterday after the markets digested the implications of one of the most disastrous rights issue in the history of the City of London.
With just 8.29 per cent of shareholders taking up the rights issue at the price of 275p, underwriters Morgan Stanley and Dresdner Kleinwort managed yesterday to sell another 29.5 per cent of the rump left over from the £4bn fund-raising.
But that meant the two underwriters were still left with 62.1 per cent of the shares, setting them back £2.5bn. They are understood to have sub-underwritten an estimated 38 per cent of the issue, two thirds of that with existing investors.
A Dresdner Kleinwort spokesman said: “We will manage any stick as we consider appropriate. We see value in the shares and are not under pressure to sell.” Sources suggested that some existing institutional investors had looked to purchase part of the rump to avoid diluting the price of their existing shares.
When HBOS launched its cash-call in April, shares were worth about 500p but have plunged as low as 252p in recent weeks amid concerns about the health of the US and UK banking industries.
HBOS is the latest in a series of banks that have laboured to sell shares amid volatile economic conditions, including Barclays and Bradford and Bingley.
The rights issue flop is the biggest since the government’s sale of a stake in BP failed in the wake of the 1987 stock market crash.