The Spanish bank Sabadell, led by CEO Josep Oliu, announced yesterday that it would issue 1.4 billion euros of debt, which is 26% of its capital. The markets have been eyeing a deal like this for some time. The bank has shown strong signs of growth recently, and the debt issue was necessary in order to enable Sabadell to do more debt deals, offer better yields to clients and reach a core capital goal of 11% in 2014. The success of all these goals will determine Sabadell?s near-term success.
This deal will happen in two stages. The first phase will be executed quickly for two foreign investors that will get 650 million euros, and the second phase will allocate the rest to common shareholders. Two foreign insitutional investors have already spoken for 425 million euros of the first phase, which differentiates this deal from others that have been carried out in the Spanish financial sector recently.
Jaime Gilinski is the first foreign investor that wants to buy a stake in Sabadell. He will buy 3.6% of the bank with 250 million euros and become the top individual stakeholder followed by Isak Andic, José Manuel Lara, Alicia Koplowitz and the Folchi Rusiñol family.
The second major foreign investor will be the Mexican company Fintech, which has agreed to by 150 million euros of Sabadell. The share price is set at 1.10 euros. The deal will offer Sabadell international exposure and shows that foreign investors are regaining confidence in Catalonia. Also, the debt issue is Sabadell's best option right now because its only alternative is to sell stock.
Current shareholders will experience a 39% dilution of shares, and new shareholders will see a 8.8% dilution based on Sabadell's closing stock price yesterday of 1.64 euros per share.
