Taylor Wimpey takes a punt on £500m land buying splurge
Housebuilder Taylor Wimpey has raised £522m from investors to help it buy up land which has been made cheaper by the coronavirus pandemic.
The FTSE 250 company raised funds from both new and existing shareholders in a share placing, where shares were bought at 145p each.
This represented a four per cent discount on yesterday’s closing price.
Chief executive Pete Redfern bought up £200,000 worth of shares, bringing his stake in the company to about £3.1m.
Retail investors and employees were also able to take part in the placing.
The housebuilder is hoping to buy up land while it is cheap, after the coronavirus pandemic weakened prices in the market.
When it launched the fundraise yesterday, it said that disruption in the land market as a result of the pandemic had created “short term opportunities to acquire land from a broad range of sources at attractive returns and prices below pre-Covid-19 levels”.
It has continued to actively acquire land throughout the pandemic, buying 12 sites in recent weeks.
The group said the cash would go towards another 13 sites it is currently buying as well as 60 more the group is in discussions for.
It also said it would use the cash to pay back money received under the government’s furlough scheme.
All Taylor Wimpey employees are now back from furlough.
The High Wycombe-based firm plans to return to around 80 per cent of building capacity by the end of June.
‘Fortune favours the brave’
Russ Mould, investment director at AJ Bell, said: “Fortune favours the brave and in time Taylor Wimpey’s plan to raise £500m for a land buying spree may look an inspired call.
“Part of the reason house builders have been so profitable in recent years, alongside the Help to Buy scheme, strong supply and demand dynamics and the availability of cheap mortgages, is they acquired land cheaply in the wake of the financial crisis.
“Clearly management feel there is a finite window of opportunity which they intend to take full advantage of with these new funds.
“On the negative side of the roster is the fact investors are being forced to stump up money for a business which already has a pretty strong balance sheet.”