Shares in AMP Ltd today dropped $1.85, or 19 per cent, to $7.95 from the $9.80 price they had traded at in New Zealand before their suspension ahead of the company's restructuring announcement.
AMP on Friday announced it had successfully raised A$1.2 billion ($1.4 billion) through an institutional share placement of 222 million shares at A$5.50 ($6.23) per share.
AMP also plans to launch an underwritten A$500 million retail share offer later this month. Oversubscriptions of up to A$200 million may be accepted.
AMP announced the capital raising on Thursday to fund its plan to spin off its United Kingdom business from its Australian business. It will also write down A$2.6 billion mainly associated with its British business, Henderson, which would sell its sharemarket investments in favour of fixed-interest securities.
Alliance Capital portfolio manager Andrew Bascand said on Friday that valuations for AMP had come back to between A$5.80 to A$6.50 a share, compared with the previous A$8 to A$10.
That reflected the "implicit earnings downgrade of around 20 to 25 per cent" in the announcement, Mr Bascand said.
The dilutionary effect of the share issue "means the actual earnings downgrade is somewhere between 30 to 35 per cent", he said.
AMP's lower valuation could also have a significant impact on insurer Promina's A$2.1 billion float, for which the institutional book build gets under way on Wednesday.
Analysts said AMP's deeply discounted capital raising could not have come at a worse time for Promina.
However, the shares continued to plunge after their initial trading and within eight minutes of the resumption were down to $7.00 -- some 29 per cent below Thursday's price.
Andrew South of BT Funds Management said he expected the shares to continue to drift lower when the Australian market opened.
However, he believed the share price would settle above the placement price of A$5.50, ($6.22).
AMP had done the right thing by splitting off the British operations, making the writedowns and raising new capital, he said.
"We have given the company a tick in the box for doing the right thing," he said.
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