TOKYO, Oct. 24 (Reuters) — Mizuho Financial Group Inc., Japan’s second biggest bank, will raise $4.6 billion in a share sale designed to strengthen its balance sheet on the back of its soaring stock price.
Mizuho on Monday set a price of 696,780 yen per share for the sale, a 2 percent discount to the bank’s closing share price of 711,000 yen.
The issue was between three and four times oversubscribed, with particularly strong demand from foreign investors, said joint global coordinator Nikko Citigroup.
Nikko Citigroup said all 700,000 shares initially planned for sale plus the full over-allotment of 63,000 shares had been placed, valuing the sale at 531.64 billion yen ($4.59 billion).
A total of 315,000 shares out of the base of 700,000 are to be sold overseas, up from the 280,000 shares initially planned.
The shares will be handed over on Nov. 2, Mizuho said.
Mizuho is looking to bolster its capital in part to offset 850 billion yen in taxpayer-provided funds that it plans to return to the government by March 2007. Mizuho is to repay 30 percent of that amount, or 250 billion yen, by the end of this month.
The Japanese government injected about 11 trillion yen into major banks in sector-wide rescues in 1998 and 1999. The infusions provided a capital cushion at a time when banks were struggling with problem loans, but they also saddled recipients with cumbersome oversight rules.
Banks have since returned to profit after clearing trillions of yen in soured debts, and they are repaying taxpayers’ money in increasingly large installments.
Mizuho and other banks have seen their share prices jump in recent months as investors bet that Japan’s accelerating economic recovery will give newly healthy lenders an extra lift.
Shares in Mizuho have risen by nearly half since August and are up 12-fold from their low in April 2003 of 58,300 yen.
Mizuho’s share gain since the start of 2005 has also beat the bank sector sub-index IBNKS.
