(22 May 2013 – Australia) Hybrid shares issued by Macquarie Group have been snapped up by investors, prompting the investment bank to bulk up its offering by almost 50 percent.
Last week, Macquarie announced plans to raise up to A$400 million by issuing the hybrid shares and by Monday the bank announced it had received A$580 million in commitments from brokers and institutional investors.
Following the positive response, the bank increased the maximum offer size to A$600 million and closed the bookbuild early, rather than leaving it open until Tuesday.
Hybrid shares pay a fixed interest rate, which usually reflects returns on bonds, and eventually convert into ordinary shares.
The assets have been a hit with investors because of their more predictable returns, with big companies raising some A$7 billion through hybrid shares last year.
Westpac and National Australia Bank have each sold more than A$1 billion in hybrids this year.
The Macquarie notes will pay a distribution twice a year at the bank bill swap rate plus a margin of 4 percent – the lower end of the range under consideration.
Macquarie will open an offer to shareholders on Wednesday, but the strong demand means there will be no general retail offer.
While investors have embraced hybrids as a solid source of income during a time of market volatility, the corporate regulator has warned people that the products are often complex and riskier than corporate bonds.