Redrow to raise £80m to help fund expansion

 
City A.M. Reporter
SHARES in housebuilder Redrow rose by almost eight per cent yesterday after it said it would raise about £80m to increase investment in London and outside the capital, in a move that could raise the stake of its executive chairman to above 40 per cent.

The company, one of the smaller London-listed housebuilders, said it would raise £19.4m through a placing of 14.9m new shares to Bridgemere Securities, a firm controlled by its executive chairman Steve Morgan.

Redrow said it would raise another £60.2m, through an open offer underwritten by Bridgemere, by issuing three new shares for every 20 existing shares at 130p per new share, an 11 per cent premium to Redrow’s Monday close.

The transactions would increase Morgan’s interest in Redrow to at least 32.8 per cent, or depending on the take-up of the open offer, up to 41.6 per cent. He currently owns 30 per cent.

As a result, the fundraising would require shareholder approval, including a waiver of Morgan’s obligation to make a mandatory offer for the company.

Redrow said it expects 2012 to continue to show good progress helped partly by the introduction of the government’s NewBuy scheme, which allows lenders to provide 95 per cent mortgages on new build properties worth up to £500,000 with guarantees from the government and developers.

Redrow said its sales since January had been encouraging, and net private reservations for 16 weeks to 20 April were 843 homes, up two per cent on a like-for-like basis, and nine per cent including London.