Morgan puts his foot down with £80m share offer

Redrow shares rose 7p to 124p on Tuesday morning after it announced an £80m share placing and open offer to fund land acquisitions.

The Deeside-based housebuilder has specific sites in London in mind and believes prime regional sites will continue to become available.

The fund-raising will be in two parts: £19.4m will be raised through a firm placing of 14.9m new shares to Bridgemere Securities and £60.2m will be raised through a three-for-20 open offer at 130p/share, fully underwritten by Bridgemere.

Steve Morgan, executive chairman of Redrow, said: "Redrow has made good progress under a strategy designed to return it to its roots, selling high-quality, differentiated family homes. We now believe the time is right to accelerate that strategy by taking advantage of the development opportunities we see. During the year to date we have secured planning on over 3,000 plots from our forward land bank, acquired new sites totalling £50m within Harrow Estates and commenced construction on our two largest London sites. There are an increasing number of land opportunities both in London and in the regions and as such we are looking to raise further capital to enable us to take advantage of these opportunities as they arise."

The largest of the new sites purchased in the past 12 months was the 500-acre former Woodford Aerodrome in [Stockport and] Cheshire, in a joint venture with JCB heir Joe Bamford's development vehicle Avro Heritage, where pre-planning consultations are currently taking place with a view to an application for a 'garden village' of 800 homes.

Redrow's net debt stands at £120m compared to £80m at this time last year, due to the investment in land. The share price gives Redrow a market capital value of £385m. (LON:RDW)