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Shares of banking company SVB Financial Group (NASDAQ:SIVB) plunged 60% on Thursday after it shared plans to raise capital.
SVB said it was seeking over $2 billion in additional funding. It planned to offer $1.25 billion of its common stock and $500 million of depositary shares registered as public offerings.
SVB also completed the plan to sell its available-for-sale securities portfolio. This transaction would result in an after-tax loss of $(1.8) billion in Q1 2023.
Additionally, SVB entered a private purchase subscription agreement with General Atlantic, a growth equity investor, to purchase $500 million of common stock at the public offering price. The company's CEO, Greg Becker, sent a letter citing higher interest rates and high cash burn from clients as reasons for the need for capital.
The stock was halted during pre-market trading Friday at around 8:41 am ET for code news pending. Amid the trading halt, CNBC's David Faber reported the company's proposed capital raise has failed, with CNBC reporting SVB Financial is in talks to sell itself.
Silicon Valley Bank has now been closed by Federal Deposit Insurance Corporation (FDIC). The news comes on the heels of SVB's parent company, SVB Financial Group, failing to raise cash to sustain operations.
ETFs with significant exposure to the banking company include BlackRock ETF Trust, BlackRock Future Financial And Technology ETF (NYSE: BPAY), IShares U.S. Regional Banks ETF (NYSE: IAT), Invesco KBW Bank ETF (NASDAQ: KBWB). The ETFs have exposure to SIVB between 3%-4% of their total holdings.
The ETFs have lost 11%-18% last month, missing the Factset segment average.
BPAY traded lower by 5.01% at $20.58 on the last check Friday. IAT traded lower by 5.60% at $41.14, and KBWB traded lower by 3.78% at $47.54.
Read: EXCLUSIVE: Jim Cramer Recommended SVB Financial In February, An Example Of 'His Reverse Midas Touch'
Price Action: SIVB shares traded lower by 62.8% at $39.49 on the last check Friday.
