IAG raises $1.2 billion through institutional placement

The equity raised through the placement, along with the other capital raising initiatives announced yesterday, will be used to fund the purchase of the insurance underwriting businesses of Wesfarmers Limited.

The $1.845 billion acquisition is expected to strengthen IAG's position in its home markets of Australia and New Zealand. It comprises the Wesfarmers underwriting companies trading under the WFI and Lumley Insurance brands, as well as a ten-year distribution agreement with Coles.

The acquisition is subject to all necessary regulatory approvals and is expected to be completed in the second quarter of calendar 2014. IAG has requested that the current trading halt be lifted prior to the commencement of trading this morning.

As previously announced, IAG intends to offer retail shareholders the opportunity to participate in a share purchase plan. This will allow eligible shareholders to increase their investment in IAG at a price which is no more than the price paid by institutional investors in the placement. Details of the share purchase plan are expected to be made available to shareholders in early January 2014.