Discretionary Dividends and Leadership Change Pose New Challenges for Australian Unity

Equity Raising to Bolster Financial Position

Australian Unity Limited (ASX – AYU) has officially opened a non-renounceable entitlement offer, inviting existing mutual capital instrument (MCI) holders to subscribe for new MCIs at a ratio of one new MCI for every four held, priced at $80 each. This offer, alongside a recently completed placement to wholesale investors which raised $160 million, forms part of a broader equity raising initiative targeting approximately $120 million.

The proceeds from this capital raising are earmarked primarily for reducing the company's gearing ratio and providing financial flexibility to support the scheduled payment of acquisition consideration for Plena Healthcare. Additional funds will be allocated to general corporate purposes, reinforcing Australian Unity’s ongoing capital management strategy.

Placement Exceeds Expectations

The placement component of the equity raising was notably oversubscribed, surpassing the initial $100 million target and reaching $160 million. This strong investor demand reflects confidence in Australian Unity’s strategic direction and financial health. Settlement of the placement is expected by 20 October 2025, with new MCIs to be issued and commence trading shortly thereafter.

Entitlement Offer Details and Investor Considerations

The entitlement offer opened on 2 October 2025 and will close on 14 October 2025. Eligible MCI holders in Australia and New Zealand can participate, with entitlements being non-renounceable and thus non-transferable or tradeable on the ASX. New MCIs issued under the offer will rank equally with existing MCIs but will not be entitled to the dividend payable on 15 October 2025, as they will be issued after the record date.

Investors are advised to carefully review the offer booklet, which outlines the terms, risks, and application procedures. Notably, dividends on MCIs are discretionary and non-cumulative, introducing an element of uncertainty regarding income streams. The offer price represents a 5% discount to the cash dividend-adjusted closing market price prior to the announcement, with an attractive grossed-up running yield of 8.93% per annum assuming full dividend payments.

Leadership Transition Marks New Era

In a significant leadership development, Australian Unity announced the appointment of Ms Kelly Bayer Rosmarin as the next Group Managing Director and CEO, effective 15 December 2025. Ms Bayer Rosmarin succeeds Mr Rohan Mead, who is retiring after 21 years at the helm. Her extensive experience in leading large-scale transformations and digital innovation across major Australian corporations positions her well to guide Australian Unity through its next phase of growth and transformation.

The board expressed strong confidence in Ms Bayer Rosmarin’s ability to advance the company’s vision of enabling Real Wellbeing for its members and communities, emphasizing her blend of care, intellect, and business acumen. This leadership change coincides with Australian Unity’s ongoing transformation agenda, which aims to enhance operational efficiency and expand its portfolio of sustainable businesses.

Looking Ahead

Australian Unity’s capital raising and leadership transition come at a pivotal time as the company seeks to consolidate its financial position and accelerate strategic initiatives. The success of the entitlement offer and placement will be closely watched by investors, as will the market’s reception to the new CEO’s leadership. The mutual capital instruments remain a unique investment vehicle, with their perpetual nature and discretionary dividends requiring investors to weigh risks alongside potential returns.