Herbert Smith Freehills has advised the joint lead managers of Australia and New Zealand Banking Group Limited’s (ANZ) offer of new Tier 1 hybrid securities known as ANZ Capital Notes (Notes), which are fully paid, mandatorily convertible, subordinated, perpetual notes issued by ANZ (Offer). The Offer raised A$1 billion, with the ability to raise more.

The Notes are offered at an issue price of $100 and are expected to be quoted on the ASX.

APRA has confirmed that the 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 ANZ under the Offer will be used for general corporate purposes.

Herbert Smith Freehills acted for six joint lead managers, being ANZ Securities, Citi, Commonwealth Bank of Australia, J.P. Morgan, National Australia Bank and RBS Morgans. Bell Potter, Morgan Stanley Wealth Management and Ord Minnett were appointed as co-managers on the transaction.

The Herbert Smith Freehills team was led by joint head of equity capital markets, Philippa Stone and executive counsel Lauren Magraith, supported by senior associate Lucy Hall and solicitor John Blake.

“This transaction is the most recent in a succession of transactions involving Australian banks going to market with significant hybrid security offerings since the release of APRA’s new Basel III prudential standards in 2012,” said Stone. “ANZ is the final of the major Australian banks to come to market with such an offering and we are very pleased to have acted for the Joint Lead Manager syndicate on this transaction, following our roles on each of the other major bank hybrid offerings.”

King & Wood Mallesons advised ANZ. KPMG were accounting and financial advisers, with Greenwoods & Freehills providing tax 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 Macquarie’s $580 million Capital Notes offer, Westpac’s $1.38 billion Capital Notes offer and NAB’s $1.51 billion CPS offer (each of which were Basel III compliant offerings), as well as 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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