National Australia Bank Prices CYBG IPO

LONDON—National Australia Bank Ltd. Wednesday priced the initial public offering of CYBG PLC, the holding company of Clydesdale Bank PLC and Yorkshire Bank, at 180 pence a share, the lower end of the indicated range set last month, marking a milestone in NAB's efforts to exit struggling overseas businesses to focus on its core Australian and New Zealand franchises.

The Australian bank is selling 219.83 million CYBG shares, or 25% of its issued share capital in the IPO, and expects to make up to £ 396 million ($570.6 million) gross. The remaining 75% is being spun off to the Australian lender's shareholders.

CYBG shares initially rose to 184.25 pence as it started conditional trading in London, but have slipped back to 181.25 pence at 0825 GMT, implying a market capitalization of £ 1.59 billion. Unconditional trading is expected to start in London on Feb. 8 and on the ASX Feb. 4.

"CYBG is in great shape to begin this exciting new chapter. With the IPO process successfully behind us, all of our energy will be dedicated to delivering industry leading service for our customers and improved and sustainable returns for our new and future shareholders from around the world," Chief Executive David Duffy said.

Pricing of the IPO, and unconditional trading in London was originally due Feb. 2 and trading on the ASX Feb. 3. However the company was Tuesday forced to delay the IPO of CYBG by one day after receiving a request from a ratings agency "for certain financial information relating to its assessment of Clydesdale Bank's short- and/or long-term deposit rating." CYBG said Tuesday it doesn't anticipate a downgrade to have any material impact on its ability to raise funding, the overall cost of funding, or the financial outlook for CYBG.

On Jan. 18, National Australia Bank priced CYBG at between 175 pence to 235 pence each, valuing the U.K. group at £ 1.54 billion to £ 2.07 billion.

The demerger of CYBG PLC was approved by the Supreme Court of Victoria on Monday, following shareholder approval at the meetings on Jan. 27. NAB had said back on Nov. 27 that it was planning a demerger of CYBG and stock sale to institutional investors.

"We are pleased with the response from institutional investors to the IPO, including from NAB shareholders, despite the recent significant market volatility," NAB Group Chief Executive Andrew Thorburn said.

"Our NAB strategy is focused on our home markets and on delivering a great customer experience, particularly in key segments where we have strong capability and where we see growth," he added.

Write to Ian Walker at ian.walker@wsj.com and Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

February 03, 2016 05:05 ET (10:05 GMT)

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