Westpac’s hybrid offer raised
(28 February 2012 – Australia) After announcing a hybrid share offer last week in order to raise A$750 million, Westpac has now upsized the offer, planning to tap investors for A$1 billion.
Westpac is marketing a deal to launch the prospectus for perpetual, convertible and unsecured preference shares.
The issue comes into a crowded market, with ANZ and Commonwealth Bank of Australia (CBA)'s wealth management arm, Colonial, also launching separate debt issues in the past week.
Stronger than expected demand for the ANZ offer prompted the bank to increase the size of its debt offer to A$1.5 billion from an initial offer size of A$500 million.
The Westpac shares will pay a margin of 3.25 percent over the bank bill swap rate. On current pricing that would be equivalent to 7.69 percent.
The convertible preference shares are being offered at an issue price of A$100. The securities will be traded on the Australian Stock Exchange.
The offer is to existing Westpac shareholders only and is scheduled to close on March 19.
For Westpac, the hybrid issue is a capital management tool to help top up its tier-1 capital. It consists mostly of common equity or ordinary shares, but there is some room for hybrid shares to make up the rest.
Hybrid securities are often a more palatable form of capital raising for shareholders as they do not dilute profit or dividends across ordinary shares.
The issue comes into a crowded market, with ANZ and Commonwealth Bank of Australia (CBA)'s wealth management arm, Colonial, also launching separate debt issues in the past week.
Stronger than expected demand for the ANZ offer prompted the bank to increase the size of its debt offer to A$1.5 billion from an initial offer size of A$500 million.
The Westpac shares will pay a margin of 3.25 percent over the bank bill swap rate. On current pricing that would be equivalent to 7.69 percent.
The convertible preference shares are being offered at an issue price of A$100. The securities will be traded on the Australian Stock Exchange.
The offer is to existing Westpac shareholders only and is scheduled to close on March 19.
For Westpac, the hybrid issue is a capital management tool to help top up its tier-1 capital. It consists mostly of common equity or ordinary shares, but there is some room for hybrid shares to make up the rest.
Hybrid securities are often a more palatable form of capital raising for shareholders as they do not dilute profit or dividends across ordinary shares.
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