Perth-based Insured Group plans to raise $2.25 million and list on the Australian Stock Exchange while delisting from the New Zealand exchange.

Five million shares will be offered at 45 cents, which will be used to pay down debts and provide working capital.

The price is at a significant premium to Insured Group’s closing price last week of $NZ0.15 ($0.12).

According to the explanatory statement sent to shareholders last week, the directors believe the company has been undervalued.

“The (Insured Group) board does not consider the market price for ordinary shares is an accurate reflection of their true value,” the statement says.

Insured Group has not set a minimum subscription for the capital-raising. It wants to raise the full amount or all money will be returned to subscribers.

In its half-year report for the period ending December 31, the company said it had to raise $2 million to pay debts.

The statement to shareholders has spelled out the risks of the capital-raising failing and affecting the company’s ability to continue.

“Issuing new ordinary shares is the company’s preferred method of raising funds at this point of time,” the statement says.

“If the company does not raise $2.25 million this year, the company’s ability to continue to operate will be uncertain.

“Alternative funding arrangements would have to be considered. There is no certainty that such alternatives would be available.”

Insured Group has appointed Perth stockbroker DJ Carmichael as the sponsoring corporate adviser for the float.

The company says the move to switch stock exchanges is because the company has very little New Zealand business and because of the failed attempt to raise $NZ10 million ($8 million) in 2010.

Lack of trade in the shares on the NZX, despite a move to consolidate the number of shares on offer, has been cited as another reason to ditch the New Zealand exchange.

The directors believe listing in Australia will create more interest in the company and boost its share price as the “insurance sector is better understood on the ASX”.

Insured Group also cites lower compliance costs as another reason for the move.

“The company has inadvertently breached the [New Zealand] listing rules twice in the past two years and the resulting heavy financial penalties and media fallout have damaged the company’s brand and reputation,” the statement says.

Shareholders will vote on the motion to undertake the capital-raising and move from the NZX at a meeting in Perth on May 9.