New Zealand cloud accounting company XERO has raised US$700m from an upsized zero-coupon five-year convertible bond, the largest in Australia since 2010. The CB, which was launched with a US$600m target, carries zero yield and the conversion premium was set at the top of the 27.5%-35.0% range. The funds will be used to buy back up to US$300m of a CB due 2023, pay for the costs of a call option transaction, and for potential acquisitions and strategic investments. The deal met a strong response with the books more than four times covered. Almost 100 investors participated in the transaction, including long-only and hedge funds from Asia and Europe. Hedge funds took slightly more of the deal than long-investors as preferential allocations were given to holders of Zero's 2023 CBs, largely owned by hedge funds..
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