Warmer welcome likely for Westpac

Westpac Banking Corporation's launch of New Zealand class shares appears likely to be more warmly received by the market than financial services group Tower's offering.

Tower raised $360 million late last month to support its demutualisation but at a price below its target range, partly due to the anticipated demand for the Westpac issue.

Last night brokers for Westpac said due to strong demand from broker clients, the firm allocation of 25 million NZ class shares was increased 20 per cent to 30 million. Based on the NZ dollar equivalent of the current Westpac ordinary share price, that translated to more than $360 million, Ross Mear, director of Credit Suisse First Boston and Tony Pigou, director of Ord Minnett, said in a statement.

"We understand that this level of firm allocation is the highest ever made in a New Zealand equity issue."

The issue is being organised to allow Westpac New Zealand shareholders to receive imputed dividends, ostensibly from the profits of its local banking entity, WestpacTrust.

As a result of the initial broker interest, total demand from New Zealand investors is now expected to exceed $500 million of the $800 million issue. The balance will be raised in an international book build which closes on Friday.