Unicredit's 13 billion capital increase was a complete success and in the headquarters in Piazza Gae Aulenti in Milan, CEO Jean-Pierre Mustier and his team breathed a big sigh of relief after the worries of recent months.
The main phase of the recapitalization of the Milanese bank has been completed. The amount requested on the market was high, very high. It is no coincidence that it is thelargest capital increase in the history of Italian finance.
UNICREDIT: HOW THE CAPITAL INCREASE WENT
Despite the high amount and the economic and political difficulties that characterize the short to medium term, investors have responded well. To be precise, based on what was communicated by Unicredit, 616.559.900 option rights were exercised and 1.603.055.740 new shares subscribed. In percentage terms it is the 99,8% of the total new shares offered. The remaining 0,2% of new unsubscribed shares is worth €30,9 million.
The operation can therefore be considered a complete success. The same market that a few months ago "denied" 5 billion to Monte dei Paschi has granted almost 13 to Unicredit. A reaction, far from obvious, endorsed by funds and institutional investors who have acquired an important part of the bank's share capital.
UNICREDIT: WHAT HAPPENS AFTER THE CAPITAL INCREASE?
The option rights that have not been exercised, equal to 1.469.645 units, will be offered on the Stock Exchange in the sessions of 27 and 28 February 2017, and in the sessions of 1, 2 and 3 March 2017 unless the offer is closed early from the full sale of the Rights.
Once the term has ended, according to what was communicated by Unicredit: "the purchased rights can be used for the subscription, at the price of 8,09 euros for each new share, of 13 new ordinary shares for every 5 rights purchased".
The exercise of the aforementioned rights and the subscription of new shares must be completed by 6 March. Be careful however, in the event that the offer closes early, the exercise of rights must be carried out no later than the third trading day following the communication of the aforementioned closure. Taking a practical example: if it closes on 27 February, the rights can be exercised by 2 March, if instead the deadline is the 28th, they will have to proceed with the exercise by 3.
Unicredit also informs that: "the new shares deriving from the exercise of the rights will be credited to the accounts of the authorized intermediaries adhering to the Monte Titoli SpA centralized management system at the end of the accounting day of the last day of exercise of the rights and will therefore be available from the following settlement day".
UNICREDIT: THE CONSORTIUM
In the rather remote hypothesis in which the unopted party does not find a place, the ball would pass into the hands of the guarantee consortium formed by Cib UniCredit, Morgan Stanley and Ubs in the role of structuring advisor; Bofa Merrill Lynch, Jp Morgan and Mediobanca as joint global coordinator and joint bookrunner. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs International and HSBC are co-global coordinators and joint bookrunners. Banca Imi (Intesa Sanpaolo group), Banco Santander, Barclays, Bbva, Bnp Paribas, Commerzbank, Crédit Agricole Natixis and Société Générale instead have the role of joint bookrunner.
UNICREDIT: THE CHALLENGES OF THE BANK BY JEAN PIERRE MUSTIER
Once the bank's financial problems have been archived, thanks to the capital increase, Unicredit will be able to concentrate more calmly on its future. The successful outcome of the recapitalization, which took place in a certainly not easy economic-financial scenario, undoubtedly strengthens the leadership of the managing director Jean Pierre Mustier which in June 2016 took over the fate of the institute in Piazza Gae Aulenti in order to bring it back to its former glory.
Redundancies deserve special mention envisaged by the agreement with the unions reached on 4 February, a few days before the start of the increase. The relaunch plan provides for 3.900 voluntary and incentivized exits (in addition to the 6 previously launched) by 2024 against 1.300 new hires and the closure of 800 branches. The turnover in the ratio of one hiring every three departures and the stabilization of 600 apprenticeship contracts were also established.
It will also be interesting to observe the reorganization of the shareholding structure caused by the increase, but also the possible changes relating to the composition of the board of directors and management. The Corriere della Sera he anticipated the choices made by the major shareholders. Based on what Corsera wrote, the US Capital Research fund confirmed its 6,7%, while the Aabar fund holds 5,04%. The Italian foundations, on the other hand, would have reduced their positions. In detail: Cariverona would have dropped from 2,3% to 1,8%, the Turin-based Crt would have reduced its position from 2,2% to 1,7%, the Cr Modena Foundation would have dropped to 0,5%, while the Monte di Bologna and Ravenna Foundation will have a fractional share.
Jean Pier Mustier will then have to deal with the bank profitability, after the sale of the flagships Pekao and Pioneer, without underestimating – after the renunciation of Intesa Sanpaolo – the Generali case, given that Unicredit continues to be the first shareholder of Mediobanca, which in turn is the first shareholder of the Trieste. In short, the CEO will have a lot of work to do, but after the success of the increase, the road is finally downhill.
