Suncorp is to raise $350 million with a convertible preference share issue, to keep capital at appropriate levels after it redeems a £253 million ($575 million) note issue later this month.

The new issue will be priced at $100 per share and the minimum accepted investment is $5000.

CFO John Nesbitt says the offer “will help Suncorp maintain its strong capital position and further enhance the quality and mix of its regulatory capital”.

Capital raised will qualify as Residual Tier 1 Capital with the Australian Prudential Regulation Authority, and as Additional Tier 1 Capital under the regulator’s Basel III capital adequacy framework, to be adopted from January.

The dividend rate will be determined in a book build starting tomorrow. The company expects it to be 4.65% to 4.85% above the 90-day bank bill rate of 3.43%.

That would make it higher yielding than IAG’s recent issue, which was priced 4% above the 90-day bank bill.

Dividends will be paid quarterly and the issue converts to Suncorp ordinary shares on December 17, 2019.

Prospectuses are available from Suncorp and the issue will be structured and lead-managed by UBS. The shares will be listed on the Australian Securities Exchange.