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* Biggest such fund raising in Taiwan, says Taiwan bourse
* Shares to be sold at T$60 each, with 3.8 pct annual div yield
* Firm had flagged plan to raise T$35 bln-T$50 bln in preferred shares (Adds background, milestone, Cathay share move)
By Emily Chan
TAIPEI, Oct 12 (Reuters) - Cathay Financial Holding plans to raise T$50 billion ($1.6 billion) by issuing preferred shares, two sources said, as the parent of Taiwan's largest life insurer aims to boost group finances through the biggest such fundraising in the island.
Cathay's board announced plans last month to issue T$35 billion to T$50 billion of preferred shares, with the proceeds to be used in part to help strengthen the financial structure and working capital of its units.
The shares will be sold at T$60 each, giving an annual dividend yield of 3.8 percent, the sources who had direct knowledge of the matter said on Wednesday. They requested anonymity as the details have not been made public.
The share sale would be the biggest fundraising of its kind in Taiwan, a Taiwan Stock Exchange official told Reuters. Cathay's smaller domestic rival Fubon Financial Holding earlier this year raised T$36 billion via a sale of preferred shares.
When contacted, Cathay said it has made an application to Taiwan regulators for the share sale, but did not elaborate on the details.
At mid-day trading, Cathay Financial shares climbed nearly 1 percent, while the broader market was up 0.3 percent. (Writing by Faith Hung; Editing by Muralikumar Anantharaman)