Yesterday, Standard Chartered announced an underwritten rights offering seeking to raise £1.8 billion of additional capital. Although Standard Chartered was not viewed as a likely candidate for an immediate capital raising transaction, the company stated that the offering was intended to address the “shift in investor expectations toward higher capital levels … [and reinforce] … the strength of the balance sheet during this turbulent period … [giving] … Standard Chartered the flexibility to take advantage of the opportunities emerging from the current environment.” Standard Chartered released a separate pre-close trading update earlier in the day, which indicated a “strong trading performance of the Group’s businesses to date in the second half of 2008, building on the excellent interim results.”

Highlights of the offering include:

  • Standard Chartered shareholders will have the right to purchase 30 new ordinary shares for every 91 shares they own, at a per share price of 390 pence, which represents a discount of 48.7% to the closing price on November 21, 2008, the last business day prior to the date of the announcement and a 41.6% discount to the theoretical ex-rights price based on that closing price.  
  • Temasek, Standard Chartered’s largest shareholder, is “intending to take up its rights and is also participating in the underwriting of the rights issue” (The other underwriters are J.P. Morgan Securities Ltd, UBS Limited, and Goldman Sachs International)  
  • The directors of Standard Chartered “intend to take up their entitlements in full”

Commenting on the offering, Standard Chartered’s CEO stated, “the proceeds from the rights issue announced today will further strengthen our competitive position as significant opportunities emerge in our markets.” Standard Chartered had previously stated that it had no intention to raise capital under the U.K.'s recapitalization scheme.