Bradesco Launches R$10 Billion Private Share Subscription

Overview

• Bradesco announced the offering on Thursday with a private subscription reserved for existing shareholders to raise up to R$10 billion.
• The deal will issue up to 302.9 million ordinary shares at R$15.43 and 302.0 million preferred shares at R$17.64, set at a 6% discount to recent closes, with subscription running from August 6 to September 4 and rights tradable on B3 between August 6 and September 1.
• Shareholders can use an anticipated R$6.5 billion in interest on equity (JCP) to pay for new shares and the bank’s controlling shareholders have pledged up to R$8 billion to support the operation.
• The operation allows partial homologation from R$8 billion and the final crediting of new shares depends on approval by the Banco Central, with non‑participating holders facing a maximum dilution of about 3.40% and preferrable rights sized at roughly 5.72% of holdings as of the record date.
• Analysts gave mixed reactions but flagged potential strategic upside because Bradesco’s return on equity has exceeded its cost of capital and a larger capital base could let the bank better monetize roughly R$120 billion in deferred tax assets; the move comes as peers make major ownership moves in Brazil’s banking sector.