National Australia Bank sells 34.6% stake in US subsidiary for $430 mn

National Australia Bank (NAB), one of Australia's leading lenders, has raised the stake sale of its US-based subsidiary Great Western Bancorp Inc (GWB) by approximately 3.5 per cent to 34.6 per cent on overwhelming investor response.

Three days ago, the Australian bank said in a statement that it has launched a secondary offering of 18 million shares of GWB, representing approximately 31.1-per cent stake consistent with the bank's strategy of divesting overseas assets and focusing on core businesses in Australia and New Zealand.

NAB's secondary offer follows an initial public offering (IPO) of the US subsidiary in 2014, which offered a 31.8- per cent stake.

Yesterday NAB said it has increased the offering to 20 million shares or 34.6-per cent stake in GWB fixing a price of $21.50 per share, with expected gross proceeds of around $430 million.

On exercising a 30-day option to purchase an additional 3 million shares, the total secondary offer would increase to 23 million shares or nearly 40 per cent of GWB's outstanding stock which would realise gross proceeds of $495 million.

After completion of the offering, NAB will still own 33.7 per cent of GWB or 28.5 per cent if the option is exercised in full.

Earlier in August, Victoria-based NAB had revealed plans to sell 100 per cent of its ownership of GWB over time, subject to market conditions. The timing of subsequent sales of GWB shares is unknown.

NAB Group chief executive officer Andrew Thorburn said, ''We're pleased to see the secondary offer of GWB well supported by investors. The further sell down of our stake in GWB is further progress in our strategy of focusing on our Australia and New Zealand franchise.''

South Dakota-based GWB is a full-service regional bank focused on agricultural banking providing financial services to small and mid-sized businesses. The bank is active in seven states including South Dakota, Iowa, Nebraska, Colorado, Arizona, Kansas and Missouri through its 158 branches.

On Wednesday, GWB reported a 26-per cent fall in net profit to $19.7 million in the second quarter ended 31 March from $26.7 million a year ago. Revenue for the period dropped 2.5 per cent to $89.8 million from $92.1 million.

Non-performing loans edged up to 1.05 per cent from 0.98 per cent in the December quarter while tier 1 capital ratio was down to 11.5 per cent compared with 11.8 per cent in the previous quarter.

Through the sale of GWB, NAB expects to improve its common equity tier 1 ratio by 30 basis points, according to the statement.

BofA Merrill Lynch, Deutsche Bank Securities and JP Morgan Securities LLC are acting as the joint book-running managers and underwriters for the offering.

NAB investors are anxiously waiting for the bank's exit plans for the UK where it has two struggling subsidiaries - Clydesdale Bank and Yorkshire Bank. It is believed that Macquarie Capital and Morgan Stanley are working on the details of the sale of Clydesdale Bank, which is the largest of NAB's non-core assets representing 12 per cent of the capital of the group.