Herbert Smith Freehills has advised the Joint Lead Managers of Macquarie Bank Limited’s (MBL) offer of new Tier 1 hybrid securities known as Macquarie Bank Capital Notes (BCN), which are fully paid, unsecured, subordinated, non-cumulative, mandatorily convertible notes issued by MBL. The offer is intended to raise A$400 million, with the ability to raise more or less.

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

APRA has confirmed that BCN will qualify as Additional Tier 1 Capital under the Basel III capital adequacy framework. The proceeds received by MBL under the offer will be used for general corporate funding and capital management purposes.

Herbert Smith Freehills acted for eight Joint Lead Managers, being Macquarie Capital (Australia) Limited (which was also the Sole Arranger), ANZ Securities, Citi, CBA, Evans and Partners, J.P. Morgan, NAB and Morgans Financial.

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 lawyer Hayden Guthrie.

Greenwoods & Freehills are advising MBL in relation to taxation.

Ms Magraith said “Having acted on almost all of the major bank offerings of Basel III compliant hybrid securities, we are delighted to again be acting for the Joint Lead Manager syndicate on Macquarie’s second offering of such securities since the introduction of Basel III, being the Macquarie Bank Capital Notes.”

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 the Commonwealth Bank of Australia on its A$2.6 billion offer of CommBank PERLS VII Capital Notes (and concurrent PERLS V buy-back and Reinvestment Offer), for the joint lead managers on Westpac’s A$1.31 billion offer of Capital Notes 2, Westpac’s A$925 million Subordinated Notes II and A$1.38 billion Capital Notes offers, for Commonwealth Bank of Australia on its A$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 A$269 million issue of Convertible Preference Shares and concurrent Reset Preference Share Reinvestment Offer (the second such fully Basel III compliant offering) and for Colonial on its A$1 billion offer of subordinated notes, for the joint lead managers on ANZ’s A$1.3 billion Capital Notes 2 and A$1.12 billion Capital Notes offers, Macquarie’s A$580 million Capital Notes offer and NAB’s A$1.51 billion CPS offer (each of which were Basel III compliant offerings), ANZ’s A$1.5 billion offer of ANZ Subordinated Notes, AMP’s A$325 million Subordinated Notes offer, IAG’s A$377 million offer of Convertible Preference Shares, and for AGL Energy Limited on its A$900 million Entitlement Offer and A$650 million Subordinated Notes offer.