What: The share price of QBE Insurance Group Ltd (ASX: QBE) surged over 5% on Wednesday after the group came out of a trading halt during which asset sales and a capital raising was announced.
So What: In what was a huge surprise to myself, and I'm sure others, QBE shares raced out of the blocks to hit $11.30 early on Wednesday despite an institutional placement occurring in the previous 48 hours at just $10.10. This means sophisticated investors and funds that bought some of the $650 million in issued equity will be very happy holders of a quick 10% gain.
Perhaps the writing was on the wall; local analysts have been generally optimistic about QBE's plan to sell some assets and partially IPOs the group's LMI business.
What Now: Well, investors looking to buy could well see the share price rally quickly towards $12, however there is still a retail placement of $150 million to be conducted at $10.10. I expect this will hold back the share price from rocketing away, at least until October 1 when the shares are issued.
QBE remains an interesting turnaround opportunity and the latest steps announced by management indicate that they're taking seriously their obligation to improve shareholder returns. In the meantime, QBE offers a 3.5% fully franked dividend.
