Westpac is selling down its shareholding in BT Investment from 59% to between 31% and 40%, raising about $700 million.
Chief financial officer Peter King says the sale allows the bank to realise a part of the investment, while still maintaining a significant interest in BT.
The proceeds will also increase Westpac’s capital ratios – a measure that has been under increasing scrutiny in major Australian banks because of the demand for lending – by 10 to 15 basis points, the bank says.
The sale is expected to generate a gain of $600m to $700m for Westpac, according to an investor presentation accompanying the announcement.
Shares in BT will be offered to institutional investors at between $7.50 and $8.40 over the coming days. This is a discount of between 4% and 14% on yesterday’s closing price.
Retail investors who are current Westpac shareholders will be eligible to buy either around $5000 or around $10,000 worth of BT shares at the same price as the institutional offer.
The retail offer will close on July 10.
“The strength and importance of the relationship remains unchanged,” King says. “Wealth remains a strategically important focus for the Westpac Group and our continued investment in BTIM sees us maintain a stake in asset management which is a key factor in having a strong and diversified wealth business.”
The sale is the first major transaction for Westpac under new CEO Brian Hartzer, who took over at the start of the year from Gail Kelly.
Westpac shares opened 0.85% down but quickly recovered to be 0.16% higher at $31.77.
BT was up 0.11% to $8.76.