HSBC's 12.9 billion pound ($18.9 billion) rights issue received a robust response from investors and leftover shares sold quickly, sending its shares up by more than 5 percent on Monday.
Some 96.6 percent of shares were taken in the offer and bankers sold the remaining 172.7 million shares not taken up — or the "rump" — early on Monday at 448 pence each in London and $51.83 each in Hong Kong.
That brought in 12.5 billion pounds for HSBC net of fees and expenses, which are expected to top 400 million pounds.
The third biggest rights issue ever in dollar terms will help HSBC weather losses in its troubled U.S. business and restore its capital advantage over rivals after an extended global financial crisis.
It will boost its ability to grab profitable business from banks in trouble and help it pursue bolt-on acquisitions in Asia and other emerging markets.
HSBC's London-listed shares were up 1.6 percent at 441.5 pence at 1315 GMT, after an early rally to 463.5p fizzled out. The stock was one of the strongest performers in a weaker European bank sector, despite the placing.
The "rump" was almost five-times covered, one person familiar with the matter said. The placing was at about a 2 percent discount to the price when the book closed.
"The markedly improved global investor sentiment post-G20 and the slew of strong U.S. data in recent days have helped HSBC to a great extent," said Alex Tang, research director at Core Pacific-Yamaichi International. Tang called the response to HSBC's cash call "excellent".
HSBC shares in Hong Kong closed up 5.3 percent at HK$52.05 after hitting $52.30, its highest level since it announced the cash call on March 2. The shares have soared 70 percent from the 14-year lows of HK$30.55 hit four weeks ago.
TAKING MARKET SHARE
Europe's biggest bank said on Sunday that demand in Hong Kong — where HSBC is a market darling and referred to as "big elephant" — was 98.2 percent.
"It was clear from the start of the process there was a lot of interest both institutionally and from the retail investors in Hong Kong so it was pretty well underpinned," said Alex Potter, an analyst at Collins Stewart in London.
HSBC will face more problems from its troubled U.S. arm and conditions are likely to worsen in Asia, but the price could mark "a very good entry point" for long-term investors and the rights issue will help it continue to take market share from rivals who have retreated, Potter said.
"A lot of the big Asian corporate client base has long memories, and if you're there for them in the tough times they will stick with you for a long period to come, and HSBC are mindful of that," he said.
The 5-for-12 shares offer was underwritten by Goldman Sachs , JPMorgan Cazenove, HSBC and three other co-bookrunners.
Advisers will get a base fee of 2.75 percent, worth about 350 million pounds, and are in line for a success fee of another 0.5 percent, worth 64 million pounds.
