Amcor’s A$1.6bn capital raising to contribute to the purchase of Rio Tinto’s Alcan packaging business is a sign that M&A activity will start to pick up according to lawyers working on the deal.

“We have started to see a change in the rationale for capital raisings in the recent issues that we have been involved in, and we had expected the emergence of raisings to fund M&A activity specifically,” Freehills partner Tony Sparks said. “The ability of Amcor to raise equity capital to fund such a significant acquisition is evidence of the health of the Australian equity capital markets.”

Freehills, led by Sparks, is advising Commonwealth Securities, Deutsche Bank, JP Morgan, Merrill Lynch and UBS as the underwriters on the deal while Allens Arthur Robinson is acting for Amcor.

The raising will take place by way of a non-renounceable, pro-rata entitlement offer to existing institutional and retail securityholders at A$4.30 per security. The proceeds from the raising will provide Amcor with the funds, in conjunction with other committed financing, to undertake the acquisition of the Alcan packaging businesses for A$2.4bn.