Suncorp (ASX:SUN) share price on watch amid $350m capital raising

Shares in the Aussie financial group will be in focus today

| More on:
ASX 200 capital return sea of hands throwing and grabbing money in the air

Image source: Getty Images

The Suncorp Group Ltd (ASX: SUN) share price will be on watch this morning after the financial group’s latest capital raising announcement.

Suncorp share price in focus after unveiling $350 million capital raising

Suncorp this morning launched an offer of Capital Notes 4 as it seeks to raise $350 million. The Notes will trade on the Australian Securities Exchange (ASX) under the ticker SUNPI from 24 September 2021.

The Capital Notes 4 will have a face value of $100 with a minimum investment of $5,000 and in multiples of 10 (i.e. $1,000) after that. The Suncorp share price will be one to watch in early trade after the company unveiled its latest capital raising plans to the market.

Capital Notes such as these are a more flexible way for companies like Suncorp to raise funds.

They represent more of a hybrid instrument with a mix of bond and equity-like features. Capital Notes can help lower the cost of capital and provide flexibility in the financial group’s capital structure.

The Capital Notes 4 will have fully franked distributions paid quarterly, similar to a dividend, at a rate of the 3-month Bank Bill Rate (BBSW) plus a 2.90% to 3.10% per annum margin (more like a bond coupon).

The Suncorp share price will be on the radar today after a solid month in August. Shares in the Aussie financial group are up 7.5% in the past month ahead of Monday’s open.

What else is moving Suncorp right now?

Much of those gains came on Monday 9 August following Suncorp’s latest full-year result. The Suncorp share price jumped 7.8% higher after the company unveiled strong profit growth and a $250 million share buyback scheme.

Some of the key takeaways from the result included:

  • Revenue down 4% on the prior corresponding period (pcp) to $14.2 billion.
  • Cash earnings up 42% on the pcp to $1.1 billion.
  • Net profit after tax up 13% on the pcp to $1.0 billion.
  • Final dividend per share of 40 cents and special dividend of 8 cents.

The Suncorp share price charged higher following the announcement as the company announced a focus on sustainable return on equity.

Should you invest $1,000 in Suncorp right now?

Before you consider Suncorp, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Suncorp wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Capital Raising