KUALA LUMPUR (Oct 23): Hong Leong Financial Group Bhd (HLFG) has fixed its rights issue of 94.75 million new shares at RM11.60 each, raising gross proceeds of RM1.1 billion to partially fund its banking arm Hong Leong Bank Bhd's (HLB) RM2.99 billion rights issue.

The issue price represents a discount of 20.3% to the theoretical ex-rights price of RM14.55, which was calculated based on the five-day volume-weighted average market price (VWAMP) of HLFG shares up to and including Oct 22 of RM14.82.

In a filing with Bursa Malaysia, HLFG said based on 1.05 billion HLFG shares in issue today, the rights issue will result in the issuance of 94.75 million new shares at an entitlement basis of nine rights shares for every 100 existing HLFG shares as at Nov 6.

HLFG also said it has entered into a management and underwriting agreement with Hong Leong Investment Bank Bhd (HLIB), Maybank Investment Bank Bhd (Maybank IB), Nomura Singapore Ltd, AmInvestment Bank Bhd and CIMB Investment Bank Bhd for the underwriting of 21.50 million rights shares for which no shareholders’ undertakings for its subscription had been obtained, representing 22.7% of the rights shares.

In a separate filing, HLB also announced that it has fixed its renounceable rights issue of 287.81 million new HLB shares at RM10.40 apiece, raising gross proceeds of RM2.99 billion.

The issue price represents a discount of about 22.7% to the theoretical ex-rights price of RM13.45, which was calculated based on the five-day VWAMP of up to and including Oct 22 of RM14.20.

The entitlement is on the basis of four rights share for every 25 existing shares.

HLB had earlier said the proposed exercise will strengthen the group’s capital position to continuously support its business growth and facilitate the build-up of an adequate level of capital buffer for forthcoming regulatory capital requirements.

HLB said it has also signed a management and underwriting agreement with HLIB, MIBB, Nomura Singapore, AmInvestment Bank and CIMB Investment Bank for the underwriting of 21.5 million rights shares for which no shareholders’ undertakings for its subscription had been obtained, representing 22.7% of the rights shares.

HLFG shares rose two sen or 0.14% to close at RM14.70 today, giving it a market capitalisation of RM15.48 billion, while HLB ended the day up four sen or 0.28% to RM14.20, valuing it at RM25.54 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)