Fortis shareholders eye rights issue for ABN spoils

By Emma Davis

BRUSSELS (Reuters) - Fortis will raise more than 15 billion euros ($20.41 billion) to fund its slice of a proposed bid for ABN AMRO, but shareholders should welcome this chance to rapidly expand, analysts and investors said.

Dutch-Belgian Fortis is part of a consortium of suitors including Royal Bank of Scotland and Santander that is seeking to scupper ABN's agreed takeover by Barclays.

But Fortis would need to make one of the world's largest ever rights issues to seal the deal -- around a quarter of its current market capitalisation.

"There is good complementarity, so I think they should try to do this. Strategically, it makes sense, so a lot of investors will be interested in the new group," said KBC fund manager Patrick Casselman, who manages 25 million euros of Fortis shares.

He added that Fortis, which is also expected to use cash and debt to fund its portion of the $98 billion deal, may already be talking to investors, while a source close to Fortis said a rights issue was likely to be targeted solely at institutions.

"There will be some pressure on the share in the short term, but everyone knows already in the market that Fortis will have to do this," said Casselman.

Shares in Fortis fell more than 2 percent on the day after the three groups announced their bid plan, due partly to fears over how the bank, with a market capitalisation of 43.45 billion euros ($59.15 billion), would finance the deal.

Of ABN's assets, Fortis is expected to want ABN's Dutch retail banking business, asset management and private banking, a significant addition to its current business. Cazenove, in a note last month, said it expected Fortis to pay about 25 billion euros for its share of the spoils, including the private equity unit.