Heartland raises $20m from institutions at 4.6% discount

It boosted annual profit 12% to $54.2 million in the year to June 2016

Heartland Bank's trading halt has been lifted after the bank raised $20 million from institutional investors at $1.46 per share, a 4.6% discount to the last trading price.

The bank said yesterday that it wants to raise up to $30 million through a combination of the bookbuild and a share purchase plan that will offer New Zealand-resident shareholders up to $15,000 worth of shares each. The funds raised will help maintain the lender's capital ratio after a period of strong credit expansion and also support its digital strategy.

Heartland said the final terms of the share purchase plan will be announced after its first-half earnings are published in February but noted the shares will be offered at a discount. Following this, the bank may issue Tier 2 capital "with a view toward optimising its capital position," it said.

Yesterday's institutional placement "was well supported by Australian and New Zealand investors and we welcome a number of new investors to our register as a result," Heartland said. Settlement and allotment of the new shares will occur on December 15.

Heartland has to hold capital equal to 10.5% of its risk-weighted assets, and a $30 million equity raise will strengthen its capital ratio as of November 30 by about 0.9%, according to its investor presentation. The bank's capital ratio declined to 12.42% in November from 13.78% in June and 12.71% in November.

The bank affirmed its annual guidance for net profit of between $57 million and $60 million. It boosted annual profit 12% to $54.2 million in the year to June 2016.

The shares last traded at $1.53 before being halted yesterday and have risen 16% this year.