DBS Group Rights Issue Highlights The Cost Of Success

January 29 saw Singapore's first right issue of 2009, as DBS Bank capitalised on modest exposure to the financial crisis, strong investor interest and, most importantly, a steep discount to raise SGD4.1bn (US$2.7bn) from shareholders. DBS offered around 760mn rights at one new share for every two existing units at a price of SGD5.42 each, an almost 45% discount on the stock's December 19 close. As a result, the issue received almost 27,500 acceptances and was 98.9% covered without excess applications. Significantly, DBS stock remained well above the issue price throughout the three week offering period. Going forward, however, CFW believes that the extent of the discount offered by DBS highlights the lengths that companies looking to raise cash from existing shareholders will have to go to, and we expect other firms considering a rights issue to have to follow DBS's lead.

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