Great-West Lifeco to issue C$1 billion in shares

TORONTO (Reuters) - Great-West Lifeco Inc (GWO.TO), Canada's second-largest life insurance company, said on Tuesday that it plans to issue a total of C$1 billion ($790 million) in common shares to the public and to its controlling shareholder, Power Financial Corp (PWF.TO).

It becomes the latest in a handful of Canadian financial institutions to issue equity in recent weeks to improve their capital strength.

Great-West said it plans to issue 28.9 million common shares at C$20.75 a share, or C$600 million in total, in a bought deal with a syndicate of underwriters led by BMO Capital Markets.

In addition, Power Financial will buy 19.3 million shares at the same price, totaling C$400 million.

Great-West shares closed at C$22.30 on the Toronto Stock Exchange on Tuesday, down 5.5 percent, amid a broad decline for financial stocks.

"The equity we are raising today further strengthens (Great-West) Lifeco's already strong capital position, and positions us to take advantage of emerging opportunities in today's fast-changing financial markets," Allen Loney, the company's president and CEO, said in a statement.

The news comes one day after Royal Bank of Canada (RY.TO), announced a common equity issue of at least C$2 billion, and a week after fellow insurer Manulife Financial (MFC.TO) said it would sell C$2.1 billion in new common shares. Both companies took the steps to shore up their regulatory capital bases as investors seek assurances that financial companies are well prepared to handle any unexpected shocks or future costs.

($1=$1.26 Canadian)

(Reporting by Lynne Olver; editing by Peter Galloway)