Herbert Smith Freehills has advised the Joint Lead Managers of Macquarie Group Limited’s (MGL) offer of new Tier 1 hybrid securities known as Macquarie Capital Notes (MCN), which are fully paid, subordinated, non-cumulative, unsecured, mandatorily convertible notes issued by MGL. The offer is intended to raise $400 million, with the ability to raise more or less.
MCN are offered at an issue price of $100 and are expected to be quoted on the ASX.
APRA has confirmed that MCN will qualify as Additional Tier 1 Capital under its new Basel III capital adequacy framework, which commenced on 1 January 2013. The proceeds received by MGL under the offer will be used for general corporate funding and capital management purposes.
Herbert Smith Freehills acted for 8 Joint Lead Managers, being Macquarie Capital (Australia) Limited (which was also the Arranger), ANZ, Citi, CBA, Roberts and Partners, J.P. Morgan, NAB and RBS Morgans.
The Herbert Smith Freehills team was led by joint head of equity capital markets, Philippa Stone and executive counsel, Lauren Magraith, supported by lawyer John Blake.
‘The number of Australian banks going to market with significant hybrid security offerings has continued to increase since the release of APRA’s new Basel III prudential standards in 2012’ said Stone. ‘MGL is another major Australian bank to come to market and we are very pleased to have acted on the transaction for the Joint Lead Manager syndicate.’
King & Wood Mallesons advised MGL. PricewaterhouseCoopers provided tax and accounting advice.
Herbert Smith Freehills’ capital markets team has extensive experience acting for both issuers and joint lead managers on hybrid transactions, having also recently acted for Commonwealth Bank of Australia on its $2 billion offer of PERLS VI (and concurrent PERLS IV buy-back and Reinvestment Offer) (the first fully Basel III compliant offering by an Australian bank), for Bendigo and Adelaide Bank on its $269 million issue of Convertible Preference Shares and concurrent Reset Preference Share Reinvestment Offer (the second such fully Basel III compliant offering), for the joint lead managers on Westpac’s $1.38 billion Capital Notes offer, for the joint lead managers on NAB’s $1.4 billion CPS offer, for the joint lead managers on ANZ’s $1.5 billion offer of ANZ Subordinated Notes, for Colonial on its $1 billion offer of subordinated notes, for the joint lead managers on IAG’s $377 million offer of convertible preference shares, and for AGL Energy Limited on its $900 million entitlement offer and $650 million subordinated notes offer.
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