March 5, 2013 / 6:35 PM / in 5 years

Realdania selling $1 billion stake in Danske Bank

LONDON (Reuters) - Danish philanthropic association Realdania is planning to halve its stake in the country’s biggest lender Danske Bank (DANSKE.CO) with a share sale worth as much as $1 billion.

Realdania said on Tuesday it would sell around 52 million shares, representing 5.1 percent of the bank’s total share capital, as it looks to diversify its shareholdings.

Its 10.07 percent stake in Danske accounts for more than 40 percent of the association’s assets.

“The sale of shares and the expected reinvestment in other assets is intended to achieve a more balanced investment portfolio to support future philanthropic projects,” Realdania said in a statement.

At Tuesday’s closing share price of 111.3 crowns the sale would be worth around 5,787.6 million crowns ($1 billion). Such block sales of shares are usually sold at a discount however.

Danske, which has been stung by bad debts from a burst property bubble and writedowns on loans to struggling farmers, has raised new capital twice in two years and laid off staff to in a bid to turn its business around.

After a 20 billion-crown rights issue in 2011 it raised 7 billion crowns in October last year from selling new shares to try to establish itself among the top three Nordic banks and get an improved rating from agencies.

Last month it said it had reached a turning point after posting a near four-fold rise in quarterly pretax profits and offered its first full-year forecast since the financial crisis began.

    Realdania, a shareholder since 2000, said that it had agreed not to reduce its stake further for at least another six months.

    “Having supported Danske Bank twice in its equity capital raisings during the financial crisis, Realdania is supportive of Danske Bank’s new strategy and believes Danske Bank is now in a robust financial position,” it said.

    Christian Hede, senior analyst at Jyske Markets, said Cevian Capital, which already owns just over 5 percent of Danske, could take the opportunity to increase its stake through the offering.

    “It could turn about to be a good thing in terms of share price if it turns out the shares are easy to sell or if we see that, for example, Cevian buys more,” he said.

    Order books on the offering, on which J.P. Morgan and Citi are acting as bookrunners, are expected to close on Wednesday.

    Additional reporting by Johan Ahlander and Ole Mikkelsen in Copenhagen; Editing by Greg Mahlich

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