Fat premium for new Bendigo shares

Bendigo and Adelaide Bank appears set to proceed with its retail capital raising even though the company's offer price was set on Monday at a 11 per cent premium to the market value of the scrip.

The bank's share price closed at A$5.99 - down 75 cents - following the market-wide selling frenzy on the ASX.

However, shareholders who have subscribed to participate in the share purchase plan will have to pay $6.72 for their allocations.

Many subscribed to the plan up to three weeks ago when trading conditions on local and global equity markets were comparatively benign and the offer price was not known.

While Bendigo appears to be under no obligation to abandon the share issue, the hefty premium presents a headache for the company's directors who will be cognisant of their duty to act in the best interests of shareholders.

Given that shareholders are currently able to purchase shares on market at a hefty discount to the SPP price, the bank might be risking a slice of goodwill among its sticky retail investor base by proceeding with the offer.

In a filing to the ASX on Monday Bendigo indicated it had received acceptances slightly less than its target of $50 million.

"The SPP was well supported, with Bendigo receiving applications totalling approximately $45m. Applications remain subject to final reconciliation and clearing of payments," the company told the ASX.

"Bendigo confirms that it will accept all valid applications in full, with no scale back to be applied."

Shares are expected to be allotted under the SPP on 23 March 2020 and commence trading on ASX on 24 March 2020.