IAG’s wholly owned subsidiary Insurance Australia Ltd has priced $350m of securities under the wholesale subordinated debt offering announced earlier this week.

The issue proceeds are intended to partially fund the agreed acquisition of Wesfarmers’ insurance underwriting businesses in Australia and New Zealand, including Lumley.

The subordinated debt qualifies as Tier 2 Capital under the Australian Prudential Regulation Authority’s (APRA) capital adequacy framework for general insurers.

The issue is scheduled for 19 March, 2014.

IAG’s group chief financial officer Nick Hawkins said the result was well over the hoped for minimum of $200m.

“We are very pleased with the response from investors. It demonstrates broad-based support from domestic and international institutions.”

The $350m issue will pay investors interest quarterly at a floating rate equal to the three month bank bill swap rate (BBSW) plus a margin of 2.80% per annum.