Cathay Financial Holding Co (國泰金控), the nation’s largest financial service provider by assets, plans to issue up to 400 million new common shares to strengthen its capitalization, the company said in a stock filing on Friday.
The fundraising activity, which requires approval from the Financial Supervisory Commission and the firm’s shareholders, is expected to be completed by the end of September, Cathay Financial said.
The company is also hoping the new funds can help it expand its presence in China and Southeast Asia this year to boost earnings from overseas operations.
The company said on Friday that its board had agreed to the fundraising plan, but did not set an issue price for the new shares. It is likely to raise as much as NT$15.96 billion (US$531.5 million), based on Friday’s closing share price of NT$39.9.
Cathay Financial plans to use the proceeds to inject funds into its subsidiaries, which include Cathay Life Insurance Co (國泰人壽) and Cathay United Bank (國泰世華銀行). The company will also use the proceeds to help it meet future capital requirements and fund future expansion plans, the filing said.
Eighty percent of the shares will be subscribed to by existing shareholders, while employees and other investors will subscribe to 10 percent each, the firm said.
Meanwhile, on Friday the board also approved a plan to invest in real estate in Taipei and overseas, as the company adjusts its investment strategy.
This year, the company plans to offer its shareholders a cash dividend of NT$0.7 per share on last year’s earnings of NT$17.03 billion, which represents a dividend yield of 1.75 percent, along with a stock dividend of 7 percent (or 70 shares per 1,000 held).
Cathay Financial’s accumulated profit for the first four months of this year totaled NT$9.57 billion, or NT$0.88 per share, making it the second-most profitable financial holding firm after Fubon Financial Holding Co’s (富邦金控) NT$1.3 per share.