Herbert Smith Freehills has advised the Joint Lead Managers of Westpac Banking Corporation’s (Westpac) offer of a new Tier 1 hybrid security known as Westpac Capital Notes, which are fully paid, non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes issued by Westpac. The offer is to raise $500 million, with the ability to raise more or less.
Westpac Capital Notes are expected to be quoted on the ASX and offered with an issue price of $100 each. The offer is expected to open on 7 February 2013.
APRA has confirmed that Westpac Capital Notes 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 Westpac under the offer will be used for general business purposes.
Herbert Smith Freehills acted for the Joint Lead Managers, being Westpac Institutional Bank, Deutsche Bank, ANZ Securities, UBS, Macquarie Capital, Morgan Stanley and CBA.
The Herbert Smith Freehills team was led by Philippa Stone, Partner and Co-Head of Capital Markets, working with fellow partner and Head of Debt Capital Markets Patrick Lowden, executive counsel Lauren Magraith and senior associate Lucy Hall.
‘We have seen an increasing number of Australian banks offering hybrid securities to the retail market since the release of APRA’s new Basel III prudential standards in 2012. Westpac is now the second major Australian bank to come to market and we are very pleased to have acted on the transaction after having acted on the first two Basel III capital raisings by CBA and Bendigo and Adelaide Bank last year,’ said Stone.
Westpac was advised by Allens Linklaters.
The transaction follows Westpac’s $1.19 billion offer of Tier 1 convertible preference shares issued in March 2012 and its $1.5 billion offer of Tier 2 subordinated notes issued in August 2012, on which Herbert Smith Freehills again acted for the Joint Lead Managers.
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), for Bendigo and Adelaide Bank on its $269 million issue of Convertible Preference Shares and concurrent Reset Preference Share Reinvestment 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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