A few days ago, TD Bank (TSX: TD) raised $612M in gross proceeds in an equity offering of 8 million shares at $76.50 a share. This was in conjunction of them acquiring MBNA’s credit card portfolio in Canada, announced in the middle of August.
I have stated in the past that when financial companies raise capital it generally is a yellow flag event that suggests something else negative is going on. However, this intuitively (without seeing anything but basic numbers) seems to be a wise decision by TD.
I find it interesting that the exact amount has not been disclosed. It would be interesting to see how much capital in excess of the MBNA purchase has been raised by the bank. TD Bank has 890 million shares outstanding and so thus this equity offering would be less than 1% dilutive to existing shareholders. At the existing dividend rate, TD will also experience a cash outflow of $21.8M more a year in after-tax dividends.