Chesnara PLC (LSE:CSN) has raised £150 million through the sale of new fixed-rate reset perpetual restricted Tier 1 contingent convertible notes, the company said on Wednesday.
The life insurance consolidator, which is listed in London, confirmed the pricing of the notes ahead of their issue on 1 August.
The proceeds will be used for general corporate purposes, which could include new investments and acquisitions.
"We continue to see a positive pipeline of M&A opportunities," said CEO Steve Murray.
The new notes will pay an initial interest rate of 8.5% until the first reset date.
The earliest the notes can be redeemed by Chesnara is 1 August 2030. If not redeemed at that point, the interest rate will be reset.
The notes are set to be listed on the Global Exchange Market of Euronext Dublin and are expected to be rated BBB- by Fitch Ratings, with a stable outlook.
Contingent convertible notes, sometimes known as “CoCos”, are a form of debt issued by financial institutions.
They can be converted into equity or written down in certain circumstances, often to help strengthen the company’s balance sheet during times of financial stress.
Restricted Tier 1 notes are typically used by insurers to bolster their capital base and meet regulatory requirements.
The debt issue follows Chesnara's £260 million acquisition of HSBC Life UK, which was part-funded by a successful £140 million rights issue.
"At the time of the announcement of our proposed acquisition of HSBC Life, we stated that we continued to actively assess ways to optimise our financing options, including the issuance of Restricted Tier 1 instruments," said CEO Murray.
"Following the success of our recent £140 million rights Issue as part of the financing package for the HSBC Life transaction, we are delighted with the continued support from investors as we seek to ensure we maintain financial flexibility to pursue future acquisitions."