The landmark $14bn BlackRock offering
PNC Financial Services Group’s $14bn stake sale in the world’s top asset manager comes as strategic move at a time when companies are facing a COVID-19 induced liquidity crunch.
It is the largest equity follow-on offering of 2020 and one of largest in the history of finance.
A follow-on offer is a popular method for a mature company to raise equity capital publicly (called Accelerated Bookbuild) or privately (Rights Issue or Private Placement), usually after exhausting the initial public offering (IPO) route.
A month back, PNC Financial Services Group made headlines when it decided to exit its 25 years old investment of $240m in BlackRock with the help of Morgan Stanley, Citi and Evercore who were the joint bookrunners - reaping returns north of 60x.
Monetization of PNC’s entire 22% stake gives the 175-year-old historic bank a twofold advantage. First, they can use the excess cash proceeds to solidify its financial position during the market turmoil. Second, it will allow the bank to use a part of the proceeds to make strategic acquisitions at a time, when many of its peers would be undervalued.
Thus, PNC’s undeterred faith in BlackRock paid rich dividends as other banks, which owned stakes in, had cut their investments after the 2008 crisis.
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