IAG's share purchase plan

Insurance Australia Group has announced a $1.4bn capital raising to pay for its purchase of Wesfarmers insurance business. We passed verdict on that acquisition in IAG buys Wesfarmers insurance arm on 16 Dec (Hold – $5.70). Now, as investors are faced with an offer of more shares, it’s time to pass verdict on IAG’s share purchase plan. In preview, we don’t recommend applying for more shares. Retail investors, who account for about 30% of all shareholders, will be offered just 14% of the funds raised. The rest – $1.2bn – will be offered to institutional shareholders. This is disappointing. Small...

Insurance Australia Group has announced a $1.4bn capital raising to pay for its purchase of Wesfarmers insurance business. We passed verdict on that acquisition in IAG buys Wesfarmers insurance arm on 16 Dec (Hold – $5.70). Now, as investors are faced with an offer of more shares, it’s time to pass verdict on IAG’s share purchase plan. In preview, we don’t recommend applying for more shares.

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