In mid-June PGG-W announced it had agreed to sell its finance division's rural loan book to Heartland, which hopes to be in a position to apply for a banking licence later this year.
The $3 million will be raised through a share sale to institutions. Heartland said it would raise $35 million through a share purchase scheme at 75c a share.
Heartland said in a statement yesterday it had secured a further institutional commitment for an additional $3 million in equity capital.
Since the loan book announcement, shares in Heartland, which now trade in the NZX top 50 companies index, have declined from 74c to trade around 61c yesterday.
Heartland was formed in January after the $2.2 billion merger of the Canterbury Building Society, Marac Finance and the Southern Cross Building Society. The purchase of PGG-W's rural loan book will boost its asset base to about $2.6 billion.
The rural book purchase is expected to boost Heartland's rural lending from about 6% of its book to about 21%, and take it closer to its target clients in providing rural financing.
A large slice of the $58 million Heartland wants from the capital raising, overseen by Craigs Investment Partners, includes PGG-W buying $10 million worth of shares at 75c each.
Under the deal, PGG-W would continue to offer financial services to its farmers through a licensing agreement with Heartland.
