Galicia Raises $95.5 Million in Share Offering to Fund HSBC Argentina Acquisition
Galicia Puts Forth $95.5M Share Offer to Fortify Capital Base, Settle HSBC Argentina Acquisition
BUENOS AIRES — In a strategic move, Grupo Financiero Galicia (GGAL) has unveiled plans for a public offering of up to 17.7 million new shares, priced at $5.38 apiece, aiming to raise around $95.5 million. The funds will bolster the group’s capital base and finalize its acquisition of HSBC Argentina.
The new shares will be traded on both local exchanges, BYMA and MAE, as well as on the Nasdaq in the U.S., where a registration statement has been filed with the U.S. Securities and Exchange Commission (SEC) under the Securities Act of 1933. The ADRs to be issued will represent 10 shares each, while the rights of preference and over subscription for existing shareholders have not yet been registered with the SEC.
Clarifying the intent behind the share offering, Pablo Firvida, director of institutional and investor relations at Galicia, told Bloomberg Línea on Thursday, Jan. 23, that the new emission is solely linked to the HSBC transaction. According to Argentine regulations, existing shareholders must be given the right of preference, and the proceeds will be used to pay for the acquisition of HSBC’s operations.
Impressively, Galicia anticipates sufficient market interest to enable the cash payment, even if existing shareholders do not exercise their preference rights. An alternative option would involve Galeria directly issuing shares to HSBC. Notably, Firvida emphasized that this emission does not arise from capital or liquidity needs, as the bank maintains sufficient levels to meet current credit demand.
“The market offered us more than US$2.000 million, but we only needed US$650 million,” recalled Fabián Kon, CEO of Galicia, reflecting on the group’s last trip to the market in 2017.
How Will The Deal Play Out?
Current Galicia shareholders will have the right to subscribe one new share for every 89.54 shares they own. The 10-day subscription period will also allow shareholders to exercise their right of over subscription on any shares not taken up by others. The new shares can be paid for in cash USD or by capitalizing the credit facilities maintained by HSBC Latin America B.V. and HSBC Latin America Holdings (UK) Limited with the company. The new shares will be eligible for dividends on par with existing shares.
Galicia’s Board Gives The Green Light
The share offering was approved by the ordinary and extraordinary general assembly of shareholders on Aug. 20, 2024, as well as by the board of directors in a subsequent meeting on Oct. 15. Caja de Valores S.A. has been appointed as the underwriter and depositary for the offering. The prospectus for the offering has been authorized by the relevant authorities, including the National Securities Commission and the Central Bank. Additionally, Galicia plans to list the ADRs on the Nasdaq following the SEC registration process.
This strategic share offer by Galicia signifies not just a financial maneuver, but a bold step towards solidifying its position in the Argentine market. The infusion of capital will not onyl strengthen Galicia’s financial foundation but also empower its ambitions to complete the HSBC Argentina acquisition. This move paints a picture of a institution confident in its future, demonstrating a commitment to both expansion and resilience in a dynamic financial landscape. The triumphant execution of this offering, coupled with the integration of HSBC Argentina, has the potential to propel Galicia to new heights, reshaping the competitive dynamics of the Argentine banking sector.
…too enable the issuance to be fully subscribed. This demonstrates investor confidence in Galicia’s strategy and its ability to successfully integrate HSBC Argentina into its existing operations.
The acquisition,powered by this strategic share offering,positions Galicia for notable growth and market share expansion in Argentina. By bolstering its capital base,Galicia sets the stage for further strategic initiatives and solidifies its standing as a leading financial institution in the region. The triumphant execution of this transaction marks a pivotal moment for Galicia,signaling a bold step towards consolidating its dominance and shaping the future of Argentine finance.