(Bloomberg) -- Merrill Lynch & Co., the U.S. bank battered by subprime mortgages losses, raised $6.6 billion by selling preferred shares to a group including the Kuwaiti Investment Authority and Japan's Mizuho Financial Group Inc.
The group also includes the Korean Investment Corp. and clients of U.S. money managers TPG-Axon Capital and T. Rowe Price Associates Inc., Merrill said in a statement today. The mandatory convertible securities carry a 9 percent annual dividend and a 17 percent conversion premium. The investors won't have a say in how Merrill is run, the bank said.
Merrill is raising money after $8.4 billion of writedowns on U.S. mortgage investments led to the biggest loss in its 93- year history in the third quarter. Today's investment comes a month after the New York-based firm raised $6.2 billion from Singapore's Temasek Holdings Pte and Davis Selected Advisors LP.
``We look forward to our relationship with Kuwait Investment Authority providing Merrill Lynch with additional opportunities to grow its presence there,'' Merrill Chief Executive Officer John Thain said in today's statement. ``Because of their extensive corporate client base in Japan and their deep network in China, the Pacific Rim and globally, we expect future collaboration with Mizuho to be very productive.''
Thain, who took over Dec. 1, joined Citigroup Inc., Morgan Stanley and UBS AG in tapping overseas investors to shore up capital. U.S. and European banks and securities firms have turned to Asian and Middle Eastern governments and investors for about $34 billion of fresh funds.
Citigroup Loss
The world's biggest financial institutions have announced more than $100 billion in writedowns and loan losses sparked by the U.S. subprime mortgage slump, eroding their balance sheets and sending shares plunging.
Citigroup Inc., the biggest U.S. bank, posted a $9.83 billion loss in the fourth quarter today and said it will raise $12.5 billion through selling securities to investors including Singapore and Kuwait.
Merrill probably will post a loss of $3.23 billion on Jan. 17, topping the record $2.24 billion shortfall reported in the third quarter, Stan O'Neal's last as CEO, analysts estimate.
The firm may write down $15 billion related to U.S. mortgage losses, almost twice its original forecast, the New York Times reported Jan. 11, citing unidentified people briefed on the plan. Merrill is trying to raise $4 billion from investors in the U.S., Asia and the Middle East to shore up its finances, the Times said, citing the same people.
The bank is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News.
Kuwait Investment Authority Managing Director Bader al-Saad was in a meeting and couldn't be reached for comment when Bloomberg called his Kuwait city office today.
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