IAG has completed its share purchase plan,as it looks to raise equity for the $1.845 billion purchase of Wesfarmers’ insurance underwriting businesses.

MD Mike Wilkins says all eligible applications were accepted for $26 million of new shares.

The company will issue about 43 million new shares at $5.47 each, to begin trading tomorrow.

IAG has also completed the book-build to raise $1.2 billion through institutional placement, also at $5.47 per share.

The acquisition of Wesfarmers’ insurance underwriting businesses, including the WFI and Lumley brands and a 10-year distribution agreement with Coles, is expected to be finalised in the second quarter of this year, subject to regulatory approvals.

Moody’s says Wesfarmers’ A3/stable rating is not immediately affected by the sale.

“The insurance business has generally made only a modest contribution to overall earnings and cashflows, and its sale increases the degree of stability in the group’s business profile,” Moody’s Senior VP Ian Lewis said.

Standard & Poor’s has put its A- long-term insurer financial strength and issuer credit ratings on Wesfarmers General Insurance and Lumley General Insurance (NZ) on credit watch, with positive implications.

The move does not affect corporate credit ratings on Wesfarmers, the agency says.

Also see NZ commission calls for submissions on Lumley takeover