Heartland plans to raise $30m across bookbuild and share placement

Heartland Bank wants to raise up to $30 million through a placement and share purchase plan to maintain its capital ratio after strong lending growth, as well as support its digital strategy.

The placement will be conducted today through a bookbuild for institutional and other select investors in New Zealand and Australia, run by First NZ Capital, the bank said in a statement. Heartland will raise up to $20 million through the placement.

The share purchase plan, which will raise as much as $10 million, will offer New Zealand-resident shareholders up to $15,000 worth of shares. Heartland said the final terms will be announced early next year after its first-half earnings are published in February but noted that 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.

"Heartland expects receivables growth to continue for the rest of the 2017 financial year – in particular, during our traditionally high-volume month of December," it said in a statement. "To further invest in our digital strategy, and to ensure Heartland continues to have sufficient capital to support that growth, Heartland intends to raise up to $30 million of new capital."

Heartland said it had been investing in data analysis to "more precisely" target its customers, and has put resources into supporting digital origination. Net finance receivables rose to $3.25 billion as of September 30, from $3.11 billion in June 2016 and $2.86 billion the previous June.

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 Nov. 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 and have risen 16% this year.

(BusinessDesk)